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Courts Make Life More Difficult for Copyright Owners

It has been a rough few months in the courts for copyright owners. Three recent court decisions demonstrate that copyright holders will need to adjust their enforcement strategies.

Registration Prior to Litigation:
In Fourth Estate Public Benefit Corp. v. Wall-Street.Com, LLC, the Supreme Court held that a copyright owner may commence an infringement suit only after the Copyright Office registers the copyright. This decision is important because normal processing by the U.S. Copyright Office of application for copyright registration sometimes takes more than six months.

There are, of course, strategies still available to enable the copyright owner to commence suit more quickly. The cheapest is to file for registration of the copyright either before or at the time of publication and thereby already have the registration granted before any infringement begins. Securing the registration prior to the onset of the infringement not only avoids delay, but also offers other advantages. Specifically, additional remedies are available to the copyright holder. These include recovery of statutory damages and attorney fees.

Another strategy is to seek special handling of the application for registration by the U.S. Copyright Office as soon as an infringement is detected. Special handling is available if there exists a compelling need related to pending or prospective litigation, customs matters, or contract or publishing deadlines. The Copyright Office charges an additional special handling fee of $800 per claim. Once the request for special handling is granted, the registration process is usually completed in about one week.

Recovery of Costs:
In Remini Street, Inc. v. Oracle USA, Inc., the Supreme Court stripped Oracle of $12.8 million, an awarded by a lower court related to litigation costs (as opposed to attorney fees). Oracle convinced the lower court to award such costs based upon a provision in the Copyright Act that permits an award of “full costs.” The Supreme Court said that, despite the use of the phrase “full costs”, a court’s authority to award costs is limited to those costs identified in 28 USC §§ 1821 and 1920. These are: (1) fees charged by the clerks of court and U.S. Marshal service, (2) the cost of transcripts necessary for use in the case, (3) fees for printing and witnesses, (4) fees for making copies, (5) docketing fees, and (6) fees for court appointed experts and interpreters. The Supreme Court found that the $12.8 million related to items other than those listed and, as such, the lower court had no authority to award such costs.

Fair Use and Photographs:
In Peterman v. Republican National Committee, a court in Montana considered the defense of “fair use.” Peterman, a photographer, was paid $500 by the Montana Democratic Party to take photographs of Democratic candidate and singer-songwriter Rob Quist. Peterman granted an unrestricted royalty-free license to the Democratic Party and Quist campaign to use the resulting photographs. Both the Party and Quist campaign subsequently posted one of Peterman’s photographs (the “Work”) to Facebook without attribution or copyright information.

The Republican National Committee (RNC) prepared and distributed a mailer in support of Quist’s opponent. The mailer was prepared by a vendor who downloaded the photograph from the Quist campaign’s Facebook page, cropped the photograph, and added a treble clef and three lines of text. Peterman sued for infringement and the RNC claimed fair use and the First Amendment as defenses.

The court rejected the First Amendment defense commenting that First Amendment principles are incorporated into the fair use factors and the First Amendment “does not present an additional layer of protection for unauthorized uses.” The court, however, dismissed Peterson’s suit finding that the balance of the four fair use factors established fair use.

First, the court considered the purpose and character of the use. The court found the vendor’s two “minimal alterations” to the Work alone were insufficiently transformative. The court then considered the entire context of the mailer and found by “us[ing] Quist’s musicianship to criticize his candidacy,” the mailer “changed the function and meaning of the Work by connoting a critical message not inherent in the Work itself.” This purpose, along with the noncommercial nature of the mailer, was sufficiently transformative favoring a finding of fair use.

Second, the court considered the nature of the copyrighted work. The court noted that the photo had been published and shared by the Democratic Party, Quist’s campaign, and Peterman. The court acknowledged that the photo was “unequivocally creative”, yet decided this factor was neutral.

Third, the court considered the amount and substantiality of the portion of the photo used. The court found this factor weighed against fair use because “the RNC copied essentially the entirety of the Work” and “could have made its point as effectively without incorporating the Work into its mailer.”

Fourth, the court considered the effect of the use upon the potential market for or value of the original. The court found this factor favored fair use because “[t]he Work has no recognizable value outside of the . . . campaign, and that value has been fully realized by Peterman,” who had been paid by the Democratic Party.

The court then held that the first and fourth factors were “determinative” in this case and granted summary judgment for the Republican National Committee on its fair use defense. The result may have been very different with a slight change in the facts and had additional steps been taken by Peterman, the Quist campaign or the Democratic Party.

About the Author

James Nikolai is an intellectual property attorney in DeWitt’s Minneapolis office. Jim has substantial experience representing clients in the areas of patents, trademarks, copyrights, trade secrets, software protection and licensing. He has successfully represented both plaintiffs and defendants in litigating intellectual property claims. If you have any intellectual property questions, you can reach Jim by email or at (612) 305-1518.

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