Fair Use is an Exception to Copyright Law

I am frequently asked by clients if they can make use of someone else’s intellectual property. The myths abound. Here are three: Just because it’s an educational use doesn’t mean it’s a fair use (although it helps). Just because something lives in the public eye doesn’t mean it’s not protected by copyright or other intellectual property laws. (Consider the Hollywood Sign which is protected by trademark law.) Just because you’ve taken less than 10% of a work doesn’t mean you aren’t infringing on the copyright for that work.

Copyright owners also operate under misconceptions. The most common mistake is believing that when a third party cannot prove fair use, its use of a copyrighted work will be considered infringing.

In fact, the Ninth Circuit just clarified that fair use is an exception to copyright law and not a defense. This was the first federal appeals court case to rule on this issue. The decision is the latest in the ongoing battle between plaintiff Stephanie Lenz (“Lenz”) and defendant Universal Music Corp. and affiliated companies (“Universal”). Starting in a rural kitchen in Pennsylvania, the case is now a landmark decision in copyright law that protects many home videographers from takedown notices.

On February 7, 2007, Lenz uploaded to YouTube a twenty-nine second video showing her toddler bopping happily in her kitchen to Prince’s song, “Let’s Go Crazy”. Lenz entitled it “Let’s Go Crazy #1.” During the video, Lenz asks her toddler “What do you think of the music?” Universal, a music publishing company that administers the copyrights to the song, identified the video through its daily copyright review procedures and concluded that the copyrighted work was the “focus” of the video based on its duration through the video, its volume, the title of the video, and Lenz’s question about the music during the video. As a result, Universal sent a Digital Millennium Copyright Act (“DMCA”) takedown notice to YouTube for Lenz’ video. The DMCA notice included the required “good faith belief” statement, averring that Lenz’s use of Prince’s song was “not authorized by the copyright owner, its agent, or the law.”

YouTube removed the video on June 5, 2007 and gave Lenz an opportunity to respond. Lenz’ first response was incomplete and the video remained offline. Universal responded by pointing out the technical issues with the response and protesting the proposed reinstatement of the video, arguing that Lenz had no license to the music but making no mention of fair use. After Lenz retained counsel, she submitted a second DMCA counter-notice, asserting the video qualified as fair use. YouTube reposted the video approximately six weeks later in mid-July, 2007. Later that month, Lenz sued Universal, alleging that she had suffered damages during the time that YouTube had removed her video in response to Universal’s takedown notice. As of October 2015, the video had over 1.7 million hits, although presumably some of its popularity is due to Lenz’ legal action.

Lenz’ lawsuit alleges a violation of the DMCA’s 17 USC Section 512(f). Her second amended complaint claims that Universal is liable for knowingly and materially misrepresenting that her online video infringes Prince’s copyrights.

The Ninth Circuit made it clear at the inception of its opinion that Lenz’s lawsuits had implications for more than her home video. Noting that Lenz’s claim “boils down to a question of whether copyright holders have been abusing the extrajudicial takedown procures provided for in the DMCA,” the Ninth Circuit delivered a clear holding on the importance of a fair use analysis in the DMCA setting:

We hold that the statute requires copyright holders to consider fair use before sending a takedown notification, and that failure to do so raises a triable issue as to whether the copyright holder formed a subjective good faith belief that the use was not authorized by law.

In short, the court rejected Universal’s arguments and held that fair use is a right under the law not a defense to copyright infringement. As a result, a copyright holder must consider whether a third-party use of its work is fair use before sending a DMCA takedown notice. In the instant case, the factual case record, through the district court level, made it clear that Universal had never considered fair use. Universal’s internal reviewer did not testify that he considered fair use at all in his analysis, and Universal admitted in a request for admission that it had not instructed any consideration of fair use during internal review of the video.

The Ninth Circuit opinion paves the way for Lenz to proceed with her lawsuit against Universal. If she can prove her use is a fair use, she is also allowed to seek damages, no matter how nominal, including expenses, costs, and attorneys’ fees.

Whether the case has a chilling effect on DMCA takedown notices remains to be seen. Certainly, after this round of the Lenz case, copyright holders will be sharpening their internal review processes to include fair use analyses. The Ninth Circuit decision upholds the notion that even minimal financial damage is sufficient to allege damage under the DMCA. Accordingly, it has certainly opened the door for more DMCA litigation.

Those who seek to use copyrighted works should not shout, “Let’s go crazy” though. Determining whether a fair use are notoriously difficult to analyze. Generally, there are four factors in determining whether a fair use exists: the purpose and character of the taking, the nature of the underlying copyrighted work, the amount and substantiality of the portion used in the taking work, and the taking’s effect on the underlying work’s potential for exploitation in the marketplace. A court will examine all four factors.

Takeaways:

• If you are a copyright owner, before you issue a DMCA takedown notice, consult with your legal team on whether the alleged infringement really is a fair use. Make sure you meet the standard of review enunciated in the Lenz case.
• If you are making use of someone else’s copyright, you still need to ensure that your use is a fair use in the eyes of the law, not lay people giving advice on the Internet. If you do receive a DMCA takedown notice, you can argue the notice is improperly delivered if fair use has not been appropriately considered. In addition, you can strengthen your case if you can prove the copyright owner subjectively believed it to be a fair use and issued the DMCA takedown notice anyway.