CMOpinion: Can copyright go wrong?
What do Prince, Andy Warhol and the law have in common? They are the main characters in a legal case from the United States that could set global precedent for copyright laws, writes Diana Di Cecco, in her regular column for Mumbrella.
Every marketer is familiar with copyright. Whilst it lacks an official registration system, in Australia, it is the Copyright Act 1968 (Cth) that governs the protection of copyrighted material, be it works (such as literary, dramatic, musical and artistic) or subject matter other than works (such as recordings, film, television and audio). Marketers are likely to be even more familiar with the fair dealing exception, which allows the use of copyright material without the copyright owner’s permission in certain situations. But given fair dealing is considered an abstract concept that can be left to interpretation based on circumstance, changes to how copyright protections and exceptions are applied have become everybody’s business, regardless of jurisdiction.
A case in the United States (US), namely Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith (The Case), has piqued my attention for most of this year. Most recently, on 12 October 2022, the US Court of Appeals for the Second Circuit tried to determine the proper test for whether a work is “transformative” under the fair use doctrine. For those questioning my care factor given I am based in Australia and the two countries’ laws are different — specifically, US copyright law has a general fair use defence to a claim of copyright infringement, and Australia has certain exceptions — my reasons are two-fold. Firstly, as a consequence of international treaties, such as the Berne Convention to which both Australia and the US are party to, most extraterritorial copyright owners are protected in Australia, and Australian copyright owners are protected in most countries. Therefore, we must be mindful of jurisdictional rights especially in a digital world where the internet literally transcends jurisdiction. Secondly, is the potential global precedent. Whilst Australia is not governed by US law, the jurisdictions do learn from each other given their similarities as societies. It is possible the decision in this case is considered in a future Australian court, so yes, it is of interest to me, and should be to you, too. And thirdly, I believe fair use/dealing in the digital age needs to be reimagined for the future.
What is the fair dealing exception?
As an aide-memoire, Australia’s fair dealing exception provisions for use of copyright material without permission for the following purposes only; (1) research or study, (2) criticism or review, (3) parody or satire, (4) reporting the news, (5) enabling disabled persons to access material, and (6) as professional advice by a lawyer or attorney. It’s an exception marketers have become better acquainted with given the Internet’s ascension and our subsequent reliance on external content, images and news.
By contrast, the US use a four-factor test to determine fair use by applying the following to a case;
- purpose and character of the use;
- nature of the copyrighted work;
- amount of the portion used in relation to the copyrighted work as a whole; and
- effect of the use on the potential market for or value of the copyrighted work.
And in Australia, our consideration factors are quite similar;
- purpose and character of the dealing;
- nature of the work;
- possibility of obtaining the work within a reasonable time at an ordinary price;
- effect of the dealing upon the potential market for, or value of, the work; and
- amount and substantiality of the copied part in relation to the whole work.
Whilst the application of each law is different, it is easy to see how the over-arching nature of consideration is not dissimilar in both countries.
Case explainer
It reads like a Netflix documentary waiting to happen so brace yourself…
In 1981, photographer, Lynn Goldsmith, was commissioned by Newsweek to photograph Prince (NB: I know he changed his name in 1993 to a symbol or “The Artist Formerly Known As Prince” but for the sake of simplicity, I’m referring to him as “Prince” throughout).
In 1984, Vanity Fair commissioned Andy Warhol to create an illustration of Prince; they paid Goldsmith $400 for rights to an image from the aforementioned shoot and it was provided to Warhol as a point of reference, from which he produced 16 artworks called the Prince Series. One of them was published with credits to Warhol and Goldsmith in Vanity Fair.
Warhol died from cardiac arrest suffered from gallbladder surgery in 1987 and the Andy Warhol Foundation (AWF) assumed ownership of his works, managing their sale and licensing. During his life and particularly in the 1960’s, Warhol had been sued several times and settled, for appropriating celebrity photographs from the mass media.
Fast forward to 2016, Prince dies from an overdose. His life and contribution to music and pop culture were “celebrated” in a special edition of Vanity Fair where one of the works was published again. Permission was sought from AWF, a USD$10,000 licensing fee and $250 temporary usage fee were paid, and the special issue was on newsstands for three months. Goldsmith did not receive a credit. In their rush to publish the tribute edition, Vanity Fair did not discover Goldsmith as the copyright holder of Prince’s photograph. Goldsmith saw the tribute edition and approached AWF, suggesting they had infringed on her copyright.
In 2017, AWF initiated proceedings in the US District Court for the Southern District of New York for a declaratory judgment that the Prince Series did not infringe Goldsmith’s copyright and that it was fair use. Goldsmith files a counterclaim for copyright infringement seeking damages and injunctive relief to prevent AWF from future use of the Prince Series. AWF is granted judgement (2019), holding that use of Goldsmith’s photograph by Warhol was fair use and had been “transformative” aesthetically with “distinct creative and communicative results,” that is, that Warhol could be “perceived to have transformed Prince from a vulnerable, uncomfortable person to an iconic, larger-than-life figure.”
Goldsmith appealed, and earlier this year, the Second Circuit reversed the District Court’s decision, holding that fair use findings favoured Goldsmith, rejecting the notion of secondary works being transformative, instead observing how they could be non-transformative even with novel elements, such as the film adaptation of a book. Given the copyright holder retains rights under the US Copyright Act, the court debated a test for “transformativeness.” Applying the law in context, the court also decided the Prince Series was not transformative despite its differences to Goldsmith’s photograph and that both
works shared the common purpose of being an artistic portrait of the same person—and competed for the same market of “images of Prince’s face.”
There were further petitions for rehearing, academic opinions, influential cases and continuous references to other circuit courts—(cue the popcorn!) In the end, AWF petitioned to the Supreme Court, and earlier this month, it heard the oral arguments of the case. A decision on whether Warhol infringed Goldsmith’s copyright is expected in June 2023—a ruling in favour of AWF could see the gates open for creative appropriation, while a ruling in favour of Goldsmith could have chilling effects on creators and dramatically decrease the ability to use (or build on) existing works.
Fair use in the Digital Age
The burning question for me is how the decision in this case could impact the future? That is, an increasingly digital future where intellectual property and the rise of a “creator economy” are prevailing.
A research paper from the Phoenix Center for Advanced Legal & Economic Public Policy Studies, aptly named Fair use in the Digital Age (The Paper), could hold the key. The Paper, written for the US jurisdiction, was notably written in 2016—well ahead of its time. Its key takeaway questions whether an economic model could be used to determine an optimal level of fair use (or fair dealing). Imagine that? A predetermined way to figure out risk-adjusted return for copyright holders and secondary creators that is welfare-maximising. So far, I like.
The other aspect I was particularly fond of was The Paper’s consideration factors for when fair use should be applied with stricter interpretations, namely when; (1) there is a high cost of the original work; (2) market size for the original work is small; (3) piracy or leakages are sizeable, reducing market potential for the original work; (4) the cost of distributing secondary works is lower; (5) small amounts of transformation matters to consumers; and (6) the fixed cost of producing secondary works are small. While it leans on transformativeness (that is, the type and extent of transformation) of the secondary work, the elements provide thoughtful consideration to, and are seemingly fair spatially for, both parties.
We currently exist at a fascinating point in history; in the middle of a changing digital economy where the definition of a “creator” is constantly expanding, one where legislation is always catching up, and where technology and the Internet dominate our lives. I cannot help but wonder whether Australia should be considering copyright reform but even more so, whether our existing legal frameworks can govern our digital future? Ultimately, is it really possible to enforce fair use/dealing justly in a digital economy that operates on a global internet where data is created at a rate of 2.5 quintillion bytes per day? (That’s a lot of zeros!) I’m not even going to get into the applicability of copyright for Web3, NFTs or the Metaverse—not today.
Ultimately, I believe that if fair use is applied more liberally, it must be offset by piracy and copyright infringement becoming more difficult. Basically, that a delicate balance must be struck not to stifle creatorship and ensure the ability to be inspired by others is not penalised. The purpose of copyright is to encourage the creation of new works and create incentives for creative effort. And the only way to do that is with copyright evolution, which I believe will eventuate for the world to see in The Case—its a decision I await with bated breath (and popcorn).
Diana Di Cecco, The Fractional CMO @ Ministry of Mktg
