BitLaw

The Fair Use Statute

The doctrine of fair use developed over the years as courts tried to balance the rights of copyright owners with society's interest in allowing copying in certain, limited circumstances. This doctrine has at its core a fundamental belief that not all copying should be banned, particularly in socially important endeavors such as criticism, news reporting, teaching, and research.

Although the doctrine of fair use was originally created by the judiciary, it is now set forth in the Copyright Act. Under the Act, four factors are to be considered in order to determine whether a specific action is to be considered a "fair use." These factors are as follows:

1. the purpose and character of the use, including whether such use is of 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.

A fair use example:

It can often be difficult to determine whether or not a particular use is a "fair use". The four factors described in the statute often lead to conflicting results. This is best seen in analyzing an example fair use situation. The quotation of short passages from a novel in a negative newspaper review of that novel is generally considered a fair use. But an analysis of the four factors makes this result far from clear.

First Factor (purpose and character of the use): The first factor examines "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." 17 U.S.C. § 107(1). As the Supreme Court explained in Campbell v. Acuff-Rose Music, Inc. this factor centers on whether the new work merely supplants the original or instead adds something new with a different purpose, expression, or message-i.e., whether the use is transformative. While commercial uses generally weigh against fair use, transformative uses often favor it, particularly when the use falls within traditional categories like criticism, comment, or news reporting.

In analyzing the first factor, the copying party used the quotations in a for-profit newspaper (and therefore the use was for commercial gain). Generally, commercial use weighs against a finding of fair use. However, the fact that the purpose of the use was to review or criticize the work is a fact favorable to a finding of fair use. In Campbell, the Supreme Court emphasized that the "transformative" nature of a use-i.e., whether it adds something new with a further purpose or different characteris a central element under this factor. More recently, in Andy Warhol Foundation v. Goldsmith, the Court clarified that not all secondary uses that add new meaning are fair, especially where the new work serves a similar commercial purpose as the original. In this example, because the review uses the original text to critique it (rather than repurpose it for a competing market), courts would likely consider the use transformative, and this factor would weigh in favor of fair use.

Second Factor (nature of the copyrighted work): A novel is exactly the type of creative, fictional work that the Copyright Act is designed to protect. As a result, this second factor weighs against a finding of fair use. If the novel had not yet been published, this factor would weigh even more heavily against fair use. In Harper & Row Publishers, Inc. v. Nation Enterprises, the Supreme Court held that the author's right of first publication is a fundamental element of copyright, and that the unpublished status of a work strongly cuts against fair use. However, Congress responded to Harper & Row by amending Section 107 in 1992 to clarify that fair use can still apply to unpublished works. Unpublished status remains relevant under the second factor, but it is no longer a categorical bar to fair use.

Third Factor (amount and substantiality taken): Only short passages from the novel were included in the review, which generally weighs in favor of fair use. But this factor considers both the quantity and the quality of the material taken. If the quoted passages reflect the "heart" of the work, this could still weigh against fair use. In Harper & Row, the Court found that a relatively small excerpt could be infringing if it includes the most valuable or expressive elements of the work. Thus, even short quotations may weigh against fair use if they capture the essence of the original. In the case of a newspaper review quoting short passages from a novel, it is unlikely that the reviewer would excerpt the "heart" of the entire work, particularly in a critical context, so this factor would generally weigh in favor of fair use.

Fourth Factor (effect on potential market for protected work): Finally, the fourth factor should be considered in our example. Courts have often treated this as one of the most important factors in the fair use analysis, particularly when there is direct economic harm (see Harper & Row). However, the Supreme Court has emphasized that no single factor is determinative, and that a strongly transformative use may outweigh even some market harm (Campbell).

While a negative review may reduce sales of the book, courts have made clear that harm caused by criticism is not relevant to the fair use analysis. The fourth factor considers only whether the copying itself harms the market for the original work. In Campbell, the Court emphasized that this factor does not account for "criticism that may kill demand," but instead looks at whether the use serves as a market substitute for the original. This distinction was reinforced in Andy Warhol Foundation, where the Court found that licensing an image for commercial publication in a manner that directly competed with the original photographer's market could weigh strongly against fair use. On the other hand, in Google LLC v. Oracle America, Inc., the Court found that Google's use of portions of Oracle's declaring code did not harm the market for Oracle's copyrighted product in a relevant way, in part because Google's use was for a different platform and purpose. Applying this to our example, because the brief excerpts in a critical review are unlikely to substitute for the original novel or harm its licensing market, this factor would weigh in favor of fair use.

Conclusion: In this example, three of the four statutory factors-the purpose and character of the use, the amount and substantiality of the portion taken, and the effect on the market-support a finding of fair use. Courts have increasingly emphasized the importance of transformative purpose under the first factor and the absence of market substitution under the fourth factor. See Campbell. Because the quoted excerpts are used for critical commentary, do not replace the original work, and are unlikely to harm its market, the overall balance of factors weighs in favor of fair use.

Other fair use examples:

As shown by the example above, it can often be difficult to determine whether a particular use qualifies as a fair use. In most cases, a copyright attorney should be consulted before undertaking any significant activity which would rely on the fair use doctrine as a defense to copyright infringement.

Nonetheless, there are some traditional activities which have been used to illustrate when the fair use doctrine would apply. These activities include:

• small excerpts in a review or criticism for purposes of illustration or comment;
• a parody which incorporates some elements (but not all) of the work being parodied;
• quotations from a speech, address, or position paper in a news report; and
• limited copying made by a student for academic work.

In the context of computer technologies, the fair use doctrine is often used in the context of reverse engineering. Under trade secret principles, it is generally accepted to "reverse engineer" a product to determine how the product works. Reverse engineering may involve analyzing circuit board layouts, "peeling" back a integrated circuit chip, or decompiling computer software. However, it is impossible to decompile software and then analyze the results without making a copy (or a derivative work) of the software. Courts have sometimes held that the making of these copies in the context of reverse engineering is a fair use and is not copyright infringement.

First Amendment:

Fair use plays a central role in reconciling copyright law with the First Amendment. Although copyright law limits certain forms of expression, courts have consistently held that the fair use doctrine, along with the exclusion of facts and ideas from copyright protection, provides sufficient safeguards for free speech. In this view, fair use operates as a built-in First Amendment accommodation that ensures expressive uses-especially for commentary, criticism, news reporting, and parody-can occur without infringing copyright. The Supreme Court confirmed this framework in Eldred v. Ashcroft, where it rejected a First Amendment challenge to the extension of copyright terms. The Court emphasized that the idea/expression dichotomy and the fair use doctrine "safeguard the First Amendment interests" within copyright law. As a result, courts have generally declined to recognize a separate First Amendment defense to copyright infringement beyond what fair use already allows.