Supreme Court and Second Circuit Approach Fair Use in Divergent Opinions – Key Takeaways for Video Games Companies
Headline: The Supreme Court’s April 5, 2021 decision in Google LLC v. Oracle America, Inc. and the Second Circuit’s March 26, 2021 decision in Andy Warhol Foundation v. Goldsmith both applied the fair use doctrine to claims of copyright infringement, but came to different conclusions.
Background: Fair use is an affirmative defense to allegations of copyright infringement. To determine whether an unauthorized use of a copyrighted work is fair use, courts consider four non‑exhaustive factors:
The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
The nature of the copyrighted work;
The 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.
Many courts focus the fair use analysis on determining whether the purpose and character of the use was transformative—i.e., whether the work adds something new, with a further purpose or different character, that alters the original with new expression, meaning, or message. But recent decisions have brought home that the fair use doctrine does not have bright‑line rules. Instead, courts engage in a case-by-case and context‑sensitive analysis that considers all fair use factors, making it difficult to predict how the fair use analysis is likely to shake out in any given situation.
The Decisions: In Google v. Oracle, the Supreme Court held that Google’s verbatim copying of Oracle’s Java SE computer code was fair use. Java SE includes a programming language, a virtual machine, and libraries documented with Application Programming Interfaces, or APIs. Google copied 11,250 lines of declaring code of multiple Java APIs. The Court held that the copying was fair use, finding that each of the fair use factors favored the finding. The Court found that the purpose and character of the use favored fair use because it transformed the Java APIs “to expand the use and usefulness of Android-based smartphones” and to “create a new platform that could be readily used by programmers.” The nature of the work also favored fair use because the APIs were “inherently bound together with uncopyrightable ideas.” The amount and substantiality of the portion used in relation to the copyrighted work as a whole favored fair use because the copying was a small portion of the total lines of code in Java SE and the portion copied was tethered to a valid and transformative purpose. Finally, the market effects of the copying favored fair use because Oracle would have been unable to enter the mobile phone market regardless of Google’s copying.
In Andy Warhol Foundation v. Goldsmith, the Second Circuit came to a different conclusion. That case centered on silkscreen prints and pencil illustrations created by visual artist Andy Warhol called the Prince Series, which he based on a 1981 photograph of the musical artist Prince taken by Lynn Goldsmith. The Second Circuit held that this copying was not fair use. The Second Circuit found that purpose and character of the use was not transformative because it “retain[ed] the essential elements of the Goldsmith Photograph without significantly adding to or altering those elements” and simply recast the original in a new medium. The nature of the copyrighted work also went against fair use because the work was creative. In evaluating the amount and substantiality of the portion used, the Second Circuit viewed the single copied photograph in isolation, found that Warhol used “the whole” of a photograph and refused to consider the many photographs Goldsmith took of Prince as the whole. Finally, even though the Second Circuit found that the two works occupied “distinct markets,” it found that the Prince Series harmed the potential licensing and derivative market of Goldsmith’s photographs.
Practical Takeaways: Both cases make clear that all fair use factors must be considered, and no one is dispositive. However, Google v. Oracle and Warhol v. Goldsmith had very different treatments of what is considered transformative under the fair use test. Google took a broader view that the use and usefulness of Android-based smartphones was sufficiently transformative, though the holding may be of limited applicability in the future because of the specific facts in the case. On the other hand, Warhol took a narrower view by comparing the elements of the images and determining that merely going from one medium to another is not sufficiently transformative. While a decision by the Supreme Court would ordinarily be more influential to courts, Warhol may be more applicable to creative works where elements can be analyzed and compared.
Video game makers often strive for realism, which sometimes implicates copyrighted aspects of the real‑world such as art, sounds, or music. Although companies sometimes license such materials, the fair use defense may be important where the amount used is too small to justify a license or where a license cannot be obtained for other reasons. For video game makers relying on fair use, it is important to add or alter the expression or meaning of the work instead of relying on merely expressing the work in a new medium. Additional strategies game companies should consider to bolster their chances of prevailing on a fair use defense include:
Using only a small portion of a work.
Copying only what is necessary for the transformative use (e.g., use only what is needed to parody or criticize the third‑party work).
Not featuring third‑party material in advertising or marketing..
Avoiding third‑party material in your game that might negatively impact the market for the third‑party work (e.g., if consumers view your game as a substitute for the original work).
We also recommend reading our previous article on Solid Oak Sketches, LLC v. 2K Games, Inc., where a court found that depicting real (copyrighted) tattoos on basketball players in a video game was a fair use.
By Sean Apple