Recently, U.S. Circuit Judge Denny Chin concluded that Google's book scanning amounted to fair use because it was “highly transformative” and "didn’t harm the market for the original work."
Judge Chin also rejected the Author's Guild theory that Google was "depriving authors of income, noting that Google doesn't sell the scans or make whole copies of books available," arguing that it helped readers discover new books, leading to new income for authors.
Finally, Chin concluded that Google did "not engage in the direct commercialization of copyrighted works.” The courts have repeatedly stated that commercial use does not nullify fair use.
Fair use: a PAIN in the...
- Purpose of new work
- Amount of copyrighted work used
- Impact on copyrighted work
- Nature of copyright work
But the acid test really boils down to whether the new created work a), is transformative, and b), reduces the value of the original work. You don't need to pass all four tests, you need to pass a "weighted average," so to speak.
If you create a transformative work, the courts will generally view the new work as fair use. But even if a work is not transformative and the new work fails the four tests, the claimant must prove that the new work reduced the commercial value and market for the original copyrighted work. So yes, while the producer of the new work must demonstrate that their new work is transformative, the greater onus is on the owner of the original copyrighted work to prove damages. If the Author's Guild couldn't demonstrate that, then, while risky, fair use is a sound framework if you are careful with what you're using to create new works and are willing to cap off your commercialization. This is why some VC-backed firms balk at the approach, as VC-balked firms are inherently greedy and don't want to limit their upside (just stating fact).
Another reality is that in-house lawyers for rightsholders are generally not copyright lawyers. Once they study the topic and analyze the precedents, they reluctant conclude that the courts historically side with innovation and the creation of new content if there's a greater good. Moreover, the Author's Guild has now created a powerful precedent for the fair use argument.
When in doubt, use common sense
A news organization can use the fair use defense when using a competitive news organization's footage, as news is usually a prime case of fair use, but in that case, the company that produced the original footage may want to litigate that a competitor is using their footage (even if technically fair use may apply). Alternatively, if an entertainment publication uses footage from a song or movie to promote an artist or release, the owner of the original work may view the new work as promotional, and the company producing it as complementary, and not competitive. So in addition to news, academic and parody, review and criticism use are protected under fair use, especially in transformative cases.
To conclude, relying on fair use is as much a business risk decision as a legal one. In other words, if you don't want to occasionally put up with the hassle and headaches that come from relying on fair use, then go fully cleared -- but if you welcome this kind of debate and have never backed away from a good fight, then fair use is actually a very solid foundation if you are conservative with what you use and how you use it. It's just not for the faint of heart.
Of course, common sense dictates that you create new works using copyright material from rightholders that recognize the promotional value of the new works.
To quote Chris Rock: "Just because you can drive with your feet doesn't mean you should." As a creator of new works, you can "get away" with a lot, but that is not the spirit of the law. Conversely, as a rightholder, you can litigate to put your head in the sand and ignore the clear legal protections and rights provided by fair use, but it's probably best to be reasonable and apply common sense.
In life and in business, put yourself in the other person's shoes, appreciate their perspective -- and above all, be a good corporate citizen.