Fair Use And Attorneys’ Fees: The Supreme Court Levels (Or Tilts?) The Copyright Playing Field1995 – © 1995 New York State Bar Journal. First published in the New York State Bar Journal, Volume 67, No 2, February 1995, pages 44-48.
In March 1994, the Supreme Court rendered two decisions, issued within one week of each other, substantially altering the playing field of copyright litigation. Whether the Supreme Court's decisions may be viewed as having leveled this playing field,1 or as having tilted it in favor of copyright defendants,2 essentially depends on whom you ask. A review of the Court's opinions reveals that each decision contains several prophetic gems that will no doubt be cited in copyright cases for decades to come.
In Campbell v. Acuff-Rose Music, Inc.,3 the Supreme Court held that the Sixth Circuit Court of Appeals erred when it determined that 2 Live Crew's commercial parody could not be considered fair use, merely because it was commercial in nature.4 Rather, each of the four fair use factors must be considered, on a case-by-case basis, and weighed together – not in isolation from one another.5
The four fair use factors are codified in the Copyright Act,6 and are as follows:
- 1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
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 of the use upon the potential market for or value of the copyrighted work.
The Court in Campbell v. Acuff-Rose traced the elements of fair use back to Justice Story's early formulation in Folsom v. Marsh,7 using it as a guide in examining each of the four factors during the course of the Court's opinion.
The facts of Campbell v. Acuff-Rose are fairly simple, as distilled by Justice Souter. In 1964, Roy Orbison and William Dees wrote the Rock Ballad "Oh, Pretty Woman," which they assigned to the plaintiff Acuff-Rose Music, Inc. In 1989, Luther Campbell of the popular rap music group 2 Live Crew wrote a song entitled "Pretty Woman," "intended, through comical lyrics, to satirize the original work,"8 2 Live Crew's manager offered to pay Acuff-Rose a fee for their use of the original, and to give the original artists and Acuff-Rose proper authorship and ownership credits. Acuff-Rose refused permission for 2 Live Crew to use a parody of the original work. 2 Live Crew thereafter proceeded to release "Pretty Woman" as part of a collection of their other songs entitled "As Clean As They Wanna Be." Almost a year later, after nearly a quarter-million copies of the recording had been sold, Acuff-Rose sued for copyright infringement. The district court granted summary judgment on grounds of fair use through parody, which the Sixth Circuit Court of Appeals reversed on the grounds that the commercial use of the original work was presumptively unfair, and thus not a fair use.9 This, according to Justice Souter, is where the Sixth Circuit went astray.
Rather, Justice Souter opined that the four fair use factors must be examined on a case-by case basis. The Court then follows with a detailed analysis of each of the four factors, providing guidance to the lower courts as to how they should be considered in future cases.
In analyzing the first factor, the purpose and character of the use, Justice Souter harkened back to Justice Story's inquiry in Folsom v. Marsh, as to whether the new work merely "supercedes the objects" of the original creation.10 Justice Souter further expounded on this analysis by citing the "transformative" theory of Judge Pierre Leval of the Second Circuit Court of Appeals. Under Judge Leval's theory, the more "transformative" (newly creative) is the new work, the more likely there will be a finding of fair use.
In Justice Souter's view, "parody has an obvious claim to transformative value ... it can provide social benefit, by shedding light on an earlier work, and, in the process, creat[e] a new one."11 Justice Souter further opined that "the heart of any parodist's claim to quote from existing material, is the use of some elements of a prior author's composition to create a new one that, at least in part, comments on the author's works."12
The Court, however, did not go so far as to say that anyone taking from a prior original work can merely claim fair use through parody as a defense and escape liability. Rather, "[i]f, on the contrary, the commentary has no critical bearing on the substance or style of the original composition, which the alleged infringer merely uses to get attention or to avoid the drudgery in working up something fresh, the claim to fairness in borrowing from another's work diminishes accordingly (if it does not vanish), and other factors, like the extent of its commerciality, loom larger." Continuing in a footnote, Justice Souter further explains that a factor to be considered in the analysis is the extent to which the parody "runs the risk of serving as a substitute for the original or licensed derivatives."13
With respect to 2 Live Crew's claimed parody of "Oh, Pretty Woman," Justice Souter was very careful not to inject the Court's tastes into the analysis. "The threshold question when fair use is raised in defense of parody is whether a parodic character may reasonably be perceived. Whether, going beyond that, parody is in good taste or bad does not and should not matter to fair use ... While we might not assign high rank to the parodic element here, we think it fair to say that 2 Live Crew's song reasonably could be perceived as commenting on the original or criticizing it, to some degree."14
Once Justice Souter set out the balancing elements to be weighed in analyzing the first factor, eliminating judicial taste as a consideration, the Court follows with the most significant portion of its opinion. The Court stated:
- The Court of Appeals ... immediately cut short the enquiry into 2 Live Crew's fair use claim by confining its treatment of the first factor essentially to one relevant fact, the commercial nature of the use. The court then inflated the significance of this fact by applying a presumption ostensibly culled from Sony [Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 451 (1984)], that "every commercial use of copyrighted material is presumptively ... unfair ... In giving virtually dispositive weight to the commercial nature of the parody, the Court of Appeals erred.
* * *
- Rather, ... Sony stands for the proposition that the "fact that a publication was commercial as opposed to nonprofit is a separate factor that tends to weigh against a finding of fair use. 471 U.S. at 562. But that is all, and the fact that even the force of that tendency will vary with the context is a further reason against elevating commerciality to hard presumptive significance.15
Thus, in analyzing the first factor of the four-part fair use analysis, no longer can the district courts and courts of appeals render holdings against a finding of fair use (whether or not through parody) merely because the defendant's work is commercial in nature.
Analyzing the second factor, the nature of the copyrighted work, Justice Souter recognized that "some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied." Continuing, Souter agreed with the courts below which recognized that the Orbison/Dees original "falls within the core of the copyright's protective purposes" (citations omitted). This fact, however, is not much help in this case, or ever likely to help much in separating the fair use sheep from the infringing goats in a parody case, since parodies almost invariably copy publicly known, expressive works.16
Justice Souter treated this second factor in a mere single paragraph. In light of the Court's treatment of the second factor, one wonders if lower courts in the future will ever give equal significance to the nature of the copyrighted work vis-a-vis the other factors in the fair use analysis.
The Court, however, paid significantly more attention to the third factor of the fair use analysis, namely the amount and substantiality of the portion used in relation to the copyrighted work as a whole. "Here," stated the Court, "attention turns to the persuasiveness of a parodist's justification for the particular copying done, and ... the extent of permissible copying varies with the purpose and character of the use."17 This factor, according to Justice Souter, requires an examination not only of the quantity of the taking from the original, but in addition its quality and importance. In attempting to strike a balance, the Court stated:
- Once enough has been taken to assure identification [of the original work], how much more is reasonable will depend, say, on the extent to which the song's overriding purpose and character is to parody the original or, in contrast, the likelihood that the parody may serve as a market substitute for the original. But using some characteristic features cannot be avoided.
* * *
- This is not, of course, to say that anyone who calls himself a parodist can skim the cream and get away scot free. In parody, as in news reporting, (citation omitted) context is everything, and the question of fairness asks what else the parodist did besides go to the heart of the original.18
The Court follows this analysis by stating that no more of the lyrics from "Oh, Pretty Woman" were taken by 2 Live Crew than necessary. However, the Court remanded the case for a further determination as to whether repetition of the base riff from the Orbison/Dees original work constituted excessive copying in light of a full and proper fair use analysis as defined by its opinion.19
In analyzing the fourth fair use factor, the effect of the use upon the potential market for or value of the copyrighted work, the Court made a significant distinction between what is and is not cognizable harm under the Copyright Act. Recognizing that fair use is an affirmative defense, Justice Souter stated that a defendant's burden of demonstrating the defense must include a discussion of potential harm (or lack thereof) to relevant markets, which here included the market for rap derivatives20 (the genre of 2 Live Crew). In moving for summary judgment, 2 Live Crew only focused on the market for the original work, leaving themselves at a disadvantage.21 The Court, however, stated that this omission did not leave 2 Live Crew at the mercy of the presumption applied by the Court of Appeals that a commercial use is presumptively unfair.22
The Court, however, went further than merely examining the economic harm to the potential market for the original work ‹ and extended its analysis by stating what was "not" cognizable harm under the Copyright Act:
- No "presumption" or inference of market harm that might find support in Sony is applicable to a case involving something beyond mere duplication for commercial purposes. ... [W]hen a commercial use amounts to mere duplication of the entirety of the original, it clearly "supersede[s] the objects" (citation omitted) of the original and serves as a market replacement for it ... But when ... the second use is transformative, market substitution is at least less certain, and market harm may not be so readily inferred. ... This is so because the parody and the original usually serve different market functions.
* * *
- [W]hen lethal parody ... kills demand for the original, it does not produce a harm cognizable under the Copyright Act. ... This distinction between potentially remedial displacement and unremedial disparagement is reflected in the rule that there is no protectable market for criticism.
* * *
- [T]he only harm to derivatives that need concern us ... is the harm of market substitution. The fact that a parody may impair the market for derivative uses by the very effectiveness of its critical commentary is no more relevant under copyright than the like threat to the original market.23
Justice Kennedy, in his concurring opinion, recognized that the lower courts may be tempted to read the Court's majority decision too expansively ‹ providing an escape hatch for would be infringers. In fact, Justice Kennedy evinced his skepticism for the very fair use defense proffered by 2 Live Crew in Campbell v. Acuff-Rose. Justice Kennedy stated:
- While I am not so assured that 2 Live Crew's song is a legitimate parody, the Court's treatment of the remaining factors leaves room for the District Court to determine on remand that the song is not a fair use. As future courts apply our fair use analysis, they must take care to ensure that not just any commercial take-off is rationalized post hoc as a parody. (114 S. Ct. at 1181-82).
In Fogerty v. Fantasy, Inc.,24 John Fogerty, the famed songwriter and lead singer of the late 1960's Rock 'N' Roll group Creedence Clearwater Revival, wrote a song in 1970 entitled "Run Through the Jungle." Fogerty sold the rights in the song to the predecessor-in-interest to Fantasy, Inc., who later obtained the copyright by assignment.
In 1972, Creedence Clearwater Revival disbanded, and Fogerty subsequently began publishing his music under a different recording label. In 1985, Fogerty published and registered a copyright to the song "The Old Man Down the Road," which was distributed by Warner Brothers Records, Inc. Fantasy commenced an action against Fogerty, Warner Brothers Records, Inc. Fantasy commenced on action against Fogerty, Warner Brothers and its affiliated companies, charging that "The Old Man Down the Road" was merely "Run Through the Jungle" with different words. In short, Fogerty was accused of infringing the copyright of his own prior work. Fantasy's copyright infringement claim was tried before a jury, which returned a verdict in favor of Fogerty.
After successfully defending against Fantasy's copyright infringement claims, Fogerty moved in the District Court for attorney's fees under the Copyright Statute.25 The District Court denied Fogerty's request for attorney's fees, finding that Fantasy's infringement suit was not brought frivolously or in bad faith as required by circuit precedent for an award of attorney's fees to a successful defendant. The Ninth Court of Appeals affirmed,26 declining to abandon its standard for awarding attorney's fees which made it easier for successful copyright plaintiffs to obtain an award of attorneys fees than for successful copyright defendants.
On appeal to the Supreme Court, Justice Rehnquist labeled this different treatment a "dual standard" because, under prevailing Ninth Circuit precedent,27 successful copyright plaintiffs were awarded attorney's fees as a matter of course, while prevailing copyright defendants were required to show that the plaintiff's suit was frivolous or brought in bad faith.28 Justice Rehnquist contrasted this with the "even handed" approach of other courts of appeals, such as that of the Third Circuit,29 wherein no distinction is made in awarding attorney's fees to prevailing copyright plaintiffs as opposed to prevailing copyright defendants.
A wise lawyer once said that "the litigant who succeeds in defining the question before the court has already gone a long way toward winning the issue." Nowhere is this statement more apparent than in Fogerty v. Fantasy. In fact, Fantasy's counsel, at oral argument, complained to the Court that it should not define the issue in terms of "dual standard" versus "even handedness." Justice Rehnquist, however, was not swayed30 ‹ and the Court's analysis is reflected accordingly.
In reversing the Court of Appeals' denial of an award of attorney's fees to Fogerty, Justice Rehnquist examined several factors which supported the Court's view that the "even handed" approach should be applied in determining whether fee awards should be granted to successful copyright litigants: the statutory language, the express legislative history, the policies and objectives of the statute and Fantasy's argument of Congressional ratification by silence.
First, noted the Court, "[t]he statutory language ... gives no hint that successful plaintiffs are to be treated differently than successful defendants."31 The Statute states:
- In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.32
Fantasy contended that in an earlier case interpreting identical fee-shifting language contained in Title VII of the Civil Rights Act, Christainburg Garment Co. v. EEOC,33 the Supreme Court approved of the differentiation in treatment between successful plaintiffs and defendants. By analogy, Fantasy asserted that the two statues should be treated alike.
The Court was not persuaded. It found that while the purpose of the Civil Rights Act was to allow individual plaintiffs to act as "private attorneys general," it was the purpose of the Copyright Act to promote literary, artistic and musical expression for the good of the public.34 Where plaintiffs in Civil Rights lawsuits are typically individuals suing governmental entities, "[e]ntities which sue for copyright infringement as plaintiffs can run the gamut from corporate behemoths to starving artists, the same is true of prospective copyright defendants."35 The Court thus found Fantasy's analogy to the prior decisional interpretation of the Civil Rights Act inapplicable.
Second, the Court observed that "[t]he legislative history of § 505 provides no support for treating prevailing plaintiffs and defendants differently with respect to the recovery of attorney's fees."36 The Court continued by noting that the attorney's fee provision of the current Copyright Act (of 1976) was carried forward virtually verbatim from the former Copyright Act (of 1909) with little discussion. The only change of significance was from a mandatory standard for awarding attorney's fees to one of discretion. The House and Senate reports merely note briefly the change in the standard and that neither costs nor attorney's fees would be available against the United States or its officers.37
Third, the Court did not accept Fantasy's argument that the policies and objectives of the statute are best served by a "dual approach" to an award of attorney's fees. Justice Rehnquist stated:
- [T]he policies served by the Copyright Act are more complex, more measured, than simply maximizing the number of meritorious suits for copyright infringement.
* * *
- [M]eritorious copyright defenses should be encouraged ... to the same extent that plaintiffs are encouraged to litigate meritorious claims of infringement.
* * *
- [A] successful defense of a copyright infringement action may further the policies of the Copyright Act every bit as much as a successful prosecution of an infringement claim by the holder of a copyright.38
Fourth, the Court did not accept Fantasy's argument that Congress was presumed to be aware of prior judicial interpretations of the former Copyright Act (of 1909) which Congress adopted when it re-enacted the new attorney's fees statue in the new Copyright Act (of 1976) without change. This is otherwise known as the principle of ratification.39 In this connection, the Court reviewed two studies then before Congress when it studied revisions to the former Copyright Act.40 The Court also surveyed the prior case law under the prior statute.41 After conducting this analysis, the Court concluded:
- [N]either of the two studies presented to Congress, nor the cases referred to by the studies, support [Fantasy's] view that there was a settled construction in favor of the "dual standard" under ... [the former] 1909 Copyright Act.
Thus having rejected all of Fantasy's argument in support of the dual standard, Justice Rehnquist next turned to Fogerty's argument that the Court should adopt an interpretation of § 505 of the Copyright Act analogous to the "British Rule," which awards the prevailing litigant its attorney's fees as a matter of course. In rejecting Fogerty's argument for adoption of the "British Rule" in copyright cases, the Court stated:
- First, just as the plain language of § 505 supports petitioner's claim for disapproving the dual standard, it cuts against him in arguing for the British rule. The statute says that "the court may also award a reasonable attorney's fee to the prevailing party as part of the costs." The word "may" clearly connotes discretion. The automatic awarding of attorney's fees to the prevailing party would pretermit the exercise of that discretion.
- Second, we are mindful that Congress legislates against the strong background of the American Rule. Unlike Britain where counsel fees are regularly awarded to the prevailing party, it is the general rule in this country that unless Congress provides otherwise, parties are to bear their own attorney's fees.42 ... While § 505 is one situation in which Congress has modified the American Rule to allow an award of attorney's fees in the court's discretion, we find it impossible to believe that Congress, without more, intended to adopt the British Rule. Such a bold departure from traditional practice would have surely drawn more explicit statutory language and legislative comment.43
Justice Rehnquist, having devoted a major portion of the Court's opinion to rejecting Fantasy's arguments in support of the dual standard approach in the awarding of attorney's fees to a successful copyright litigant, and a significantly smaller portion of the opinion to rejecting Fogerty's arguments in favor of the British Rule, spends exactly one paragraph and a single footnote in providing guidance to the parties before the Court and other litigants in future copyright cases. The holding of Fogerty v. Fantasy, in fact can be summed up in two sentences:
- Prevailing plaintiffs and prevailing defendants are to be treated alike, but attorney's fees are to be awarded to prevailing parties only as a matter of the court's discretion. "There is no precise rule or formula for making these determinations," but instead equitable discretion should be exercised "in light of the considerations we have identified."44
In a footnote, the Court borrows from a list of "non-exclusive factors" suggested by the Third Circuit Court of Appeals that courts should consider in awarding, as a matter of discretion, attorney's fees to prevailing copyright litigants, as follow: (i) frivolousness, (ii) motivation, (iii) objective reasonableness (factually and legally) and (iv) the need in particular circumstances to advance considerations of compensation and deterrence. These factors are to be used as guides, which are "faithful to the purposes of the Copyright Act and ... applied to prevailing plaintiffs and defendants in an even-handed manner."45
The Court, in concluding, reversed the Ninth Circuit's judgment denying Fogerty his attorney's fees, and remanded the case for further proceedings. Justice Thomas, concurring only in the judgment, agreed that the majority correctly construed § 505 of the Copyright Act. However, Justice Thomas opined that the majority, instead of distinguishing itself from the precedent of Christianburg, should merely have stated that Christianburg was mistakenly decided ‹ in that it "cast[ed] aside the statutory language to give effect to equitable considerations."46
Unmistakably, both Campbell v. Acuff-Rose and Fogerty v. Fantasy focus on the defendant's side of copyright litigation. Campbell has put an end to the practice of some lower Federal courts that dismissed the fair use defense outright, merely because the work of the accused infringer was commercial in nature. However, the Court was very careful not to let its decision become a post hoc vehicle of escape for slavish copyists.
Fogerty has left the decision as to whether to award attorney's fees to a successful copyright litigant, whether plaintiff or defendant, in the hands of judicial discretion. Future awards of attorney's fees will not be granted automatically to either side, but rather only after a weighing of several equitable factors.
While it is certain that future defendants will quote liberally from portions of these opinions, their actual holdings serve merely to level the playing field of copyright litigation.
©1995 New York State Bar Journal. Reprinted with permission. First published in the New York State Bar Journal, Volume 67, No 2, February 1995, pages 44-48.
.Sims, C.S. and P.J.W. Sherwin, The Parody Case: 2 Versions, Natl'l L.J., 5/16/94, p. C1 ["For parodists, the Supreme Court's ruling is not the green light that many commentators say it is."].
.Sugarman, R.G. and J.P. Salvo, 'Campbell v. Acuff-Rose': Parody as Fair Use,, N.Y.L.J., 3/25/94, p. 1 ["the scope of the fair use defense will likely expand to some extent as a result of the Court's discussion..."]; Mandly, C.R. Jr., Supreme Court Decision Should Spell the End to Minority Rule on Fees, Nat'l. L.J., 5/16/94, p. C25 ["the Supreme Court's decision in Fogerty probably will signal the end to the dual standard in awarding successful copyright litigants attorney's fees."].
.114 S.Ct. 1164 (1994).
.Id. at 1168.
.Id. at 1170-71.
.17 U.S.C. § 107.
.114 S.Ct. at 1170, citing, 9 F.Cas. 342, 348 (No. 4,901) (CCD Mass. 1841).
.Id. at 1168. The Court, in an Appendix, set out the lyrics of the two songs verbatim ‹ which this author commends to a further reading, purely as a matter of sheer amusement and "shock value" to the reader.
.Id. at 1170, citing, 9 F.Cas. at 348.
.Id. at 1171.
.Id. at 1172.
.Id. at 1172 n. 14.
.Id. at 1173.
.Id. at 1173-74.
.Id. at 1175.
.Id. at 1175, citing Sony, 464 U.S. at 449-50.
.Id. at 1176.
.Id. at 1176-77.
.Id. at 1177.
.Later in the Court's opinion, Justice Souter characterized this omission as an "evidentiary hole" that, on the present "silent record" disentitled 2 Live Crew to summary judgment; but suggest that this hole "will doubtless be plugged on remand." 114 S.Ct. at 1178-79.
.Id. at 1177.
.Id. at 1177-78.
.114 S.Ct. 1023 (1994).
.17 U.S.C. § 505.
.984 F.2d 1524 (9th Cir. 1993).
.McCulloch v. Albert E. Prince, Inc., 823 F.2d 316, 323 (9th Cir. 1987).
.114 S.Ct. at 1027.
.Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3d Cir. 1986).
.114 S.Ct. at 1027 n. 7.
.Id. at 1027.
.17 U.S.C. § 505.
.434 U.S. 412 (1978).
.114 S.Ct. at 1028.
.Id. at 1028.
.Id. at 1028.
.Id. at 1028.
.Id. at 1029.
.Id. at 1030, citing Lorillard v. Pons, 434 U.S. 575, 580 (1978).
.Id., citing W. Strauss, Damage Provisions of the Copyright Law, Study No. 22 and R. Brown, Operation of the Damage Provisions of the Copyright Law: An Exploratory Study, Study No. 23.
.Id. at 1032 nn. 17 and 18.
.Citing, Aleyska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 247-262 (1975).
.114 S.Ct. at 1033.
.Id. at 1033, citing, Hensley v. Eckerhart, 461 U.S. 424, 436-437 (1983).
.Id. at 1033 n. 19, citing, Lieb v. Topstone Industries, 788 F.2d at 156 (see, fn. 27, supra.).
.Id. at 1035.