iThe copyright world has wondered what the impact would be of the US Supreme Court’s decision in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, issued last May. The historic decision updated the framework for determining if the use of a copyrighted work is “transformative” for the purpose of a fair use analysis in a lawsuit alleging copyright infringement. On March 27, the US Circuit Court of Appeals for the Tenth Circuit offered a glimpse into a seemingly changing landscape, affirming in part and reversing in part the decision of the US District Court for the Western District of Oklahoma concerning Netflix’s use of videographer Timothy Sepi’s video in its pandemic-era hit show, “Tiger King.” While the Circuit Court upheld the District Court’s determination that Sepi had no right to bring an action in respect of seven of the eight videos originally at issue — namely, because they qualified as works made for hire for the Gerald Wayne Interactive Zoological Park — the Circuit Court rejected the defendants’ arguments that their use of the remaining video, which is owned by Sepi, was “transformative.” The Circuit Court relied heavily on the Supreme Court’s decision in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith.
Plaintiff Sepi worked as a videographer at the Gerald Wayne Interactive Zoological Park in Wynnewood, Oklahoma, a tourist destination to encounter lions, tigers, and other exotic animals. He spent his days capturing footage of the park and its founder, Joe Exotic, whom he viewed as “content gold.” After terminating his employment relationship at the park, Sepi filmed a video of Joe Exotic delivering a eulogy at a funeral. The video was livestreamed on the Joe Exotic TV YouTube page and later made available for viewing. Sepi owns the copyright to that video, and the defendants featured a clip in the “Tiger King” series. The District Court determined that Netflix’s inclusion of the clip in the show was fair use and found in favor of the streaming provider on summary judgment in the copyright infringement lawsuit. However, the Circuit Court rejected this determination with respect to the first and fourth fair use factors.
In its analysis, the Circuit Court considered all four fair use factors as set forth in Section 107 of the Copyright Act: (1) the purpose and character of the use, (2) the nature of the copyrighted work, (3) the amount and substantiality of the portion taken, and (4) the effect of the use upon the potential market.
Purpose and Character
With respect to the first factor, the Circuit Court acknowledged the applicability of Campbell v. Acuff-Rose Music, Inc., the 1994 Supreme Court case concerning a parody of Roy Orbison’s “Pretty Woman.” That case established that a relevant inquiry for the purpose and character fair use factor is whether the work is “transformative,” or “supersede[s] the objects’ of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” In applying Campbell, the District Court determined the use of the clip qualified as a transformative use in that it served a purpose different from Sepi’s original funeral video. However, the Circuit Court disagreed, citing last year’s Supreme Court decision in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith. In quoting Warhol, the Circuit Court again clarified that “Campbell cannot be read to mean that § 107(1) weighs in favor of any use that adds some new expression, meaning, or message.” Further, when “commentary has no critical bearing on the substance or style of the original composition…. 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.”
The Circuit Court explained the use of the clip did not qualify as transformative in that Netflix did not comment on or “target” plaintiff’s work at all. Instead, it used the clip to comment on the subject of the video, Joe Exotic, to provide a historical reference point in his life and comment on his showmanship. According to the Circuit Court, itt follows that the defendants did not comment on any creative decisions made by Sepi or on the original composition of the video. Similarly, in Warhol, the Supreme Court determined that Andy Warhol’s use of Goldsmith’s photograph of artist Prince was not sufficiently transformative in part because Warhol did not comment on Goldsmith’s photograph, but rather its subject. The Circuit Court also found that with respect to the first factor, Netflix’s use weighed against a finding of fair use given Netflix’s streaming use is, as the plaintiffs claimed, “as commercial as it gets.”
Nature, Amount, and Substantiality
The Circuit Court agreed with the District Court that the second and third factors weighed in the defendants’ favor. With respect to the second factor, the Circuit Court found that the eulogy video was factual in nature and was previously “published” under US Copyright Law because Sepi livestreamed and made the video available on YouTube.[1] On the third factor, the court noted that Netflix used only five percent of the overall video, a “quantitatively insubstantial amount,” and the defendants used no more of the funeral video than necessary for their intended use.
Effect of Use on Potential Market
Finally, the Circuit Court found that the District Court erroneously concluded that the fourth factor weighed in the defendants’ favor simply because “Tiger King is not a substitute for the…Funeral ceremony video.” In order to justify summary judgment, there must be an adequate factual record with evidence demonstrating the potential market impact of the works. Here, because fair use is an affirmative defense, it was the defendants’ burden to show a minimal effect of the use upon the potential market for the work. Ultimately, the Circuit Court reversed and remanded the District Court’s ruling that Netflix’s use of the clip constituted fair use under the US Copyright Act, with instructions to afford the defendants an opportunity to fill the evidentiary holes and for the District Court to reweigh the fair use factors.
Time will tell whether this decision will be one of many in which federal courts analyze Warhol and curtail a previous trend of liberally interpreting Campbell to the benefit of defendants in copyright infringement suits across the country. For now, the Circuit Court’s application of Warhol’s updated “transformative” use analysis appears to demonstrate a shift away from a defendant-friendly framework towards a new legal landscape, one with potentially far-reaching implications for the rights of copyright holders.
[1] Sepi had previously livestreamed the eulogy clip on YouTube and left the video up on the platform thereafter. The Circuit Court noted that even if Sepi’s display on YouTube did not constitute publication under the Copyright Act, the fact that a work is unpublished does not itself prevent a finding of fair use.
