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Presenting a live 90-minute webinar with interactive Q&A

Obtaining Fair Use Clearance for Copyrights Making Tough Calls on Fair Use, Deciding Whether/When to Exclude Content,

Weighing Licensing Options, and Leveraging E&O Coverage

Today’s faculty features:

WEDNESDAY, SEPTEMBER 9, 2015

Jennifer L. Elgin, Of Counsel, Wiley Rein, Washington, D.C.

Joshua I. Schiller, Partner, Boies Schiller & Flexner, New York

Jon Tandler, Member, Sherman & Howard, Denver

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

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5

Fair Use and Clearances

Stafford Publishing Webinar

September 9, 2015

Jon R. Tandler

Sherman & Howard L.L.C.

jtandler@shermanhoward.com

6

Exclusive Rights of Copyright

Exclusive Rights of Copyright – Section 106 of Copyright Act

“Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

(1) to reproduce the copyrighted work in copies or phonorecords;

(2) to prepare derivative works based upon the copyrighted work;

(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.”

7

• Copyright Clause of the U.S. Constitution

–Congress has the power “. . . 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.” (U.S. Const., Art. 1, §8, c. 8).

• First Amendment of the U.S. Constitution

–“Congress shall make no law . . . abridging the freedom of speech, or of the press.” (U.S. Const. Amend. I)

Exclusive Rights vs. Freedom of Speech

8

• Balance Between Exclusive Rights and Free Speech

− There must be a constitutional balance between the

Copyright Clause and First Amendment interests, in

order for the two to co-exist:

• Copyright interest

- Necessary to promote the interests of

creators for the common good

• Free speech interest

- Necessary to democracy

Exclusive Rights vs. Freedom of Speech

9

Balance Between Exclusive Rights and Free Speech

The balance is based upon the distinction between an idea, and the expression of that idea.

• Idea = free speech (ideas are not protectable under copyright law)

• Original work of = copyrightable expression authorship fixed in (protectable under copyright law) a tangible medium

Fair use attempts to balance one’s use of another’s protected copyrighted expression in order to advance one’s ideas.

The balance is difficult—so is fair use!

Exclusive Rights vs. Freedom of Speech

10

Fair Use – Affirmative Defense to Copyright Infringement

10

Under Section 107 of the Copyright Act, the fair use of a copyrighted work,

for "purposes such as criticism, comment, news reporting, teaching (including

multiple copies for classroom use), scholarship, or research, is not an

infringement of copyright. In determining whether the use made of a work in

any particular case is a fair use the factors to be considered shall include—

(i) The purpose and character of the use, including whether such use is of

a commercial nature or is for nonprofit educational purposes;

(ii) The nature of the copyrighted work;

(iii) The amount and substantiality of the portion used in relation to the

copyrighted work as a whole; and

(iv) the effect of the use upon the potential market for or value of the

copyrighted work.”

These factors are non-exclusive and illustrative.

11

Fair Use - The Four Factors

1. Purpose and Character of the Use, Including Whether Commercial or Non-Profit.

The primary focus of a court’s inquiry is the extent to which the new work is transformative, in that it adds something new or synergistic to the original work; does the new work alter the first with “new expression, meaning, or message…”; the more transformative, the less significant other factors like commercialism. Campbell v. Acuff-Rose Music, Inc.

12

Fair Use - The Four Factors

2. The Nature of the Copyrighted Work.

- More creative the work = more copyright protection/less susceptible to fair use treatment,

- More factual, informational or functional the work = less copyright protection/more susceptible to fair use treatment.

12

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3. The amount and substantially used in relation to the copyrighted work as a whole.

- Proper analysis here includes qualitative and quantitative

determinations, including whether material taken is the “heart of the work.” Harper & Row Publishers v. Nations Enterprises.

- Debunk the myths (there may be more):

Anything less than _______ words is fair use

Anything less than _______ seconds of a sound clip is fair use.

Fair Use - The Four Factors

14

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4. Effect of Use Upon the Potential Market For or

Value Of the Copyrighted Work.

Effect on market (including potential market) for

copyrighted work, is “undoubtedly the single most

important element of fair use.” Castle Rock

Entertainment v. Carol Publishing Group.

Fair Use - The Four Factors

15

• The copyright owner owns the exclusive rights of copyright, and thus has the sole legal ability to grant third parties permission to exercise one or more of these exclusive and divisible rights.

• In counseling clients, the first questions are: Does the proposed use infringe upon or violate one of the exclusive rights of a copyright owner and, if so, will the use be eligible for fair use treatment under Section 107?

Copyright and Fair Use

16

A permission or clearance is the instrument or agreement by which the owner of a copyrighted work expressly grants permission to a third party to exercise one or more of the owner’s exclusive rights under Section 106 of the Copyright Act.

Permissions and Clearances

17

Permissions and clearances

• Provide protection against intellectual property infringement

claims;

• Facilitate learning about the origin of content and proper and

accurate attribution;

• Enable the grantee (the party obtaining the clearance) to use

third party content aligned with the grantee’s intended scope

of usage;

• Provide a legal record; and

• Satisfy media perils insurance underwriters’ requirements.

Permissions and Clearances - Functions and Project Planning

18

If a required clearance is not obtained, the infringer can be sued in a state or jurisdiction where the infringer does not reside or do regular business. Adverse consequences include:

• Violation of the law

• Publication ceased

• Distraction of management time

• Defense fees and costs

• Financial liability for actual damages, statutory damages and attorneys' fees

• Embarrassment and frustration

• Increased cost of or difficulty in obtaining insurance

Permissions and Clearances – Functions and Project Planning

19

Parties prepare permissions with various degrees of complexity and thoroughness. They should be customized to fit the facts of a particular situation, satisfy parties’ legal and business requirements, and reflect industry custom and practice. They should be tailor made.

Permissions and Clearances – Functions and Project Planning

20

Potential Rights Holders

It will likely require diligence to ascertain from whom a permission or clearance must be obtained. Potential rights holders:

• an author, lyricist or composer;

• a publisher or exclusive licensee;

• an artist;

• a musician or lyricist;

• a photographer or stock photo agency;

• a website proprietor;

Permissions and Clearances – Rights Holders

21

Potential Rights Holders

• a newspaper or magazine;

• a software publisher or developer;

• a music studio or record company;

• a music publisher;

• an estate, heir, or descendant of a copyright owner who was a person;

• an assignee or licensee of any of the foregoing; or

• a collective rights organization .

Permissions and Clearances – Rights Holders

22

Examples of items to specify in a grant of rights include whether the grant:

• is worldwide or has territorial restrictions;

• is exclusive or not;

• is perpetual or has limitations on term;

• what media it is for - print, electronic (all forms of media, whether now known or hereafter devised);

• is for audiovisual, dramatic or entertainment;

• includes the right to slice and dice content, and/or to use it in a

database or other compilation;

• includes the right to use content for promotional purposes; and

• includes the right to assign or sublicense rights granted.

Permissions and Clearances – Grant of Rights

23

Properly obtaining necessary permissions can become a pacing item, which, if not timely completed, can delay project completion and publication or release. Evaluate early on:

• components of a project and what third-party content will be utilized;

• what content will need to be cleared or licensed;

• how difficult or not it will be to obtain the permission at issue – what you want to use may be too expensive or subject to unworkable restrictions.

Get started early!

Permissions and Clearances – Final Note

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Your Presenter

Jon Tandler is a Member of Sherman & Howard L.L.C., a

super-regional law firm headquartered in Denver,

Colorado, and practices intellectual property, publishing,

information technology and business law.

Jon has been privileged to work on the legal aspects of

publishing and information technology for twenty-eight

years, and regularly teaches legal and other professionals

about these unique disciplines.

© 2015 Jon R. Tandler.

Fair Use in a New Media World

Stafford Publishing Webinar

September 9, 2015

Jennifer L. Elgin

Wiley Rein LLP

Fair Use – A Reminder

The purpose and character of the use, including

whether such use is of commercial nature or is for

nonprofit educational purposes;

The nature of the copyrighted work;

Amount and substantiality of the portion used in relation

to the copyrighted work as a whole; and

The effect of the use upon the potential market for

or value of the copyrighted work.

Defense to BOTH Direct and Secondary Liability

26

Shifting of Content in Time: Sony

Sony Corp. of America v. Universal City

Studios, Inc., 464 U.S. 417 (1984) 27

Accepting Space Shifting: Diamond Multimedia

RIAA v. Diamond Multimedia Systems,

180 F.3d 1072 (9th Cir. 1999)

• Personal copying of MP3 files

directly from a computer by Rio’s

device is “paradigmatic non-

commercial personal use entirely

consistent with the purposes of

the Act.”

• Under Sony, the “space-shifting”

of sound recordings is acceptable

and protected under the fair use

doctrine.

28

Rejecting Space Shifting: Napster

A&M Records, Inc. v. Napster, Inc.,

239 F.3d (9th Cir. 2001)

• Shift to a digital format may have

been a personal storage use BUT

• Accompanied by making the file

available to the rest of the

system’s users.

29

Rejecting Space Shifting: MP3.com

UMG v. MP3.com, 92 F. Supp. 2d 349 (S.D.N.Y. 2000)

“This is simply another way of

saying that the unauthorized copies

are being retransmitted in another

medium – an insufficient basis for

any legitimate claim of

transformation. . . . Here, defendant

adds no new ‘new aesthetics, new

insights and understandings’ to the

original music recordings it copies,

but simply repackages those

recordings to facilitate their

transmission through another

medium. While such services may

be innovative, they are not

transformative….”

30

The First DVR: ReplayTV

Paramount Pictures, Corp. v. Replay TV, Inc.,

No. 2:01-CV-09358 (C.D. Cal. Oct. 31, 2001)

31

Network (Remote Storage) DVRs: Cablevision I

Distinguished Sony

• Not a single piece of equipment

• “Under the hood" the two types of

DVRs are vastly different

• Ownership of the RS-DVR STB

remains with Cablevision and

requires a continuing relationship

• More participation in copying by

Cablevision

• More like a VOD service than a

VCR

• Cablevision has more control over

content

• Conclude: copying done by

Cablevision not customer

Twentieth Century Fox Film Corporation v. Cablevision Systems Corporation, 478 F.

Supp. 2d 607 (S.D.N.Y. 2007) (Chin, J.), rev’d on other grounds sub nom., Cartoon

Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008). 32

Skipping Forward: Fox v. DiSH

Fox Broad. Co., Inc. v. Dish Network LLC, 723 F.3d 1067 (9th Cir.

2013) (“Fox I”)

In re Autohop Litigation, No. 12 Civ. 4155 (S.D.N.Y. Oct. 1, 2013)

• Time-shifting is fair use under

Sony

• Fox did not show that if the

use became widespread, it

would adversely affect

the potential market for the

copyrighted work, although

9th Circuit found that a

secondary market did exist.

33

Skipping Forward: Aereo

American Broadcasting v. Aereo, Inc.,

134 S. Ct. 2498 (S. Ct. 2014)

• Supreme Court did not address

any defenses, including a fair use

claim - “the doctrine of ‘fair use’

can help to prevent inappropriate

or inequitable applications of the

Clause” – citing Sony

• Decision covered only near-live

transmission

• Dissent: Time-shifting not

be subject to court’s analysis

• Remand: Aereo argued

injunction should not cover

time shifting

34

Skipping Forward: Fox v. DiSH II

Fox Broad. Co., Inc. v. Dish Network LLC,

Case 2:12-cv-04529 (C.D. Cal. Jan. 20, 2015)

• Both time-shifting AND

space-shifting of the copies

that were legally created as a

result of Dish’s licensed

public performances are a fair

use

• QA copies not fair use

35

Where Does That Leave Us?

36

Fair Use in a New Media World

Jennifer L. Elgin

202-719-7453

jelgin@wileyrein.com

www.linkedin.com/in/jenniferelgin

@jenelgin

Obtaining Fair Use Clearance for Copyrights

September 9, 2015 Joshua I. Schiller

Partner Boies Schiller & Flexner

jischiller@bsfllp.com

38

Fair Use Defined

Factors from 17 U.S.C. § 107 • (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.

39

Campbell v. Acuff-Rose Music, Inc. 510 U.S. 569 (1994)

• Case centered on 2 Live Crew’s parody of “Oh, Pretty Woman” by Roy Orbison & William Dees

• The Supreme Court considered how transformative the work should be to qualify as fair use and whether parody could be fair use even if it did not comment on the copyright work itself

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Campbell v. Acuff-Rose Music, Inc. 510 U.S. 569 (1994)

The Supreme Court held:

• Commercial nature of a parody is not dispositive in finding fair use.

• Parody must be able to “conjure up” at least enough of the original to make the object of its critical wit recognizable.

The Campbell decision set the stage for modern fair use analysis.

41

Seltzer v. Green Day, Inc. 725 F.3d 1170 (9th Cir. 2013)

Case concerned Green Days’ use of the “Scream Icon” during concert performances as part of the stage design.

Scream Icon Green Day Stage

42

Seltzer v. Green Day, Inc. 725 F.3d 1170 (9th Cir. 2013)

The Ninth Circuit held that Green Day’s use of the “Scream Icon” was fair use, adding that the four factors must be applied holistically, “in light of the purpose of copyright.” • Factor 1 (Purpose): Green Day used “Scream Icon” as “raw material” in its

own original, expressive work.

• Factor 2 (Nature): “Scream Icon” is a creative work, weighing in favor of infringement.

• Factor 3 (Amount): “Scream Icon” was used in its entirety, but also wasn’t “meaningfully divisible.”

• Factor 4 (Effect): “Scream Icon” was publicly available street art whereas

Green Day used it as stage dressing for one song.

43

Cariou v. Prince 714 F.3d 694 (2d Cir. 2013)

Case concerned appropriation artist Richard Prince’s use of photographs from Yes Rasta (by Patrick Cariou) in a series of collage paintings that Prince called “Canal Zone”

(Examples on following slides)

44

Cariou v. Prince 714 F.3d 694 (2d Cir. 2013)

Cariou’s Photographs Prince’s Art

45

Cariou v. Prince 714 F.3d 694 (2d Cir. 2013)

Cariou’s Photograph s Prince’s Art

46

Cariou v. Prince 714 F.3d 694 (2d Cir. 2013)

• The Second Circuit found that 25 of the 30 “Canal Zone” works at issue were fair use as a matter of law.

• The Court remanded for further proceedings as to the other five works.

• “The ultimate test of fair use is whether the copyright law’s goal of promoting the Progress of Science and useful Arts would be better served by allowing the use than by preventing it.” (internal quotation marks omitted)

47

Cariou v. Prince 714 F.3d 694 (2d Cir. 2013)

As with Cambell and Seltzer, the Second Circuit applied the Fair Use factors in a holistic manner:

• Factor 1 (Purpose): The “Canal Zone” transformed Cariou’s photos because “the

reasonable observer” would perceive them as adding new and original meaning to the Yes Rasta photos.

• Factor 2 (Nature): Cariou’s photos were creative works, weighing in favor of infringement.

• Factor 3 (Amount): Differed from painting to painting, but secondary/fair use is allowed to “conjure up at least enough of the original to fulfill its transformative purpose.”

• Factor 4 (Effect): Consider whether the work at issue “usurped” the market for the original (i.e., whether “target audience and the nature of the infringing content is the same as the original”).

48

Authors Guild, Inc. v. Google Inc. 954 F. Supp. 2d 282 (S.D.N.Y. 2013)

The case concerned the digital reproduction of copyright books (i.e., the “Google Books” case).

The Court ultimately decided that Google’s actions were fair use.

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Authors Guild, Inc. v. Google Inc. 954 F. Supp. 2d 282 (S.D.N.Y. 2013)

The S.D.N.Y. applied the fair use factors holistically: • Factor 1 (Purpose): Google Books is “highly transformative” since it not only digitizes

the books, but presents them to users so that they may search through them, mine data from them, and otherwise analyze the books in ways that hard-copy tomes are not usually analyzed.

• Factor 2 (Nature): Since the “vast majority” of books in Google Books are non-fiction, published, and available to the public, this factor weighs in favor of fair use.

• Factor 3 (Amount): Google Books uses as much of the books as necessary to achieve its intended purposes (i.e., to provide full-text books for searching and analysis).

• Factor 4 (Effect): Google Books does not usurp the market for the hard-copy books themselves; if anything, it can bolster readers’ awareness of the works, thereby encouraging them to make a purchase. “Google does not sell its scans, and the scans do not replace the books.”

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Kienitz v. Sconnie Nation LLC 766 F.3d 756 (7th Cir. 2014)

The case concerned a poster incorporating a photo of a politician (taken by Michael Kienitz) into a graphic for t-shirts sold by Sconnie Nation.

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Kienitz v. Sconnie Nation LLC 766 F.3d 756 (7th Cir. 2014)

The Seventh Circuit held that Sconnie Nation made fair use of the photograph, applying the four factors holistically:

• Factor 1 (Purpose): Sconnie Nation used the photograph for commercial purposes.

• Factor 2 (Nature): The photographer did not argue that the t-shirts devalued the work, since it was licensed for free for public display.

• Factor 3 (Amount): Defendants used only the bare minimum of the photograph (i.e., stripping the background, recoloring it, and essentially evoking only the monotone visage of the politician).

• Factor 4 (Effect): There was very little effect since a “t-shirt or tank top is no substitute for the original photograph” and the photographer had no plan to license his work for apparel.

Significantly, the Seventh Circuit disagreed with the Prince decision’s approach to Fair Use, suggesting that the Second Circuit relied too heavily on whether a use was “transformative,” which (according to the Kienitz court) was not a factor in the Fair Use analysis.

52

North Jersey Media Group Inc. v. Pirro 74 F. Supp. 3d 605 (S.D.N.Y. 2015)

Case concerned a facebook post for a Fox News show commemorating 9/11 with a combined photograph of first-responders raising a flag at ground zero and the photo of the flag-raising at Iwo Jima.

53

North Jersey Media Group Inc. v. Pirro 74 F. Supp. 3d 605 (S.D.N.Y. 2015)

Court held that work was not fair use; factual questions persisted. • Factor 1 (Purpose): There was only a minimal alteration to the original

photograph, and inclusion of “#neverforget” beside the image in the facebook post was insufficient to add any additional meaning.

• Factor 2 (Nature): The photograph was taken and published for news-gathering purposes, therefore weighing in favor of fair use.

• Factor 3 (Amount): Fox News used as much of the photo as they

needed to in order to comment on 9/11.

• Factor 4 (Effect): Fox News’ use of the photograph poses a risk that others may just seek to use the combined 9/11 & Iwo Jima images instead of paying to license the photograph.

54

North Jersey Media Group Inc. v. Pirro 74 F. Supp. 3d 605 (S.D.N.Y. 2015)

Court held that work was not fair use; factual questions persisted. • Factor 1 (Purpose): There was only a minimal alteration to the original

photograph, and inclusion of “#neverforget” beside the image in the facebook post was insufficient to add any additional meaning.

• Factor 2 (Nature): The photograph was taken and published for news-gathering purposes, therefore weighing in favor of fair use.

• Factor 3 (Amount): Fox News used as much of the photo as they

needed to in order to comment on 9/11.

• Factor 4 (Effect): Fox News’ use of the photograph poses a risk that others may just seek to use the combined 9/11 & Iwo Jima images instead of paying to license the photograph.

55