PUBLISHEDUNITED STATES COURT OF APPEALSFOR THE FOURTH CIRCUIT
A.V., a minor, by his next friend
Robert Vanderhye; K.W., a minor,
by his next friend Kevin Wade,
Sr.; E.N., a minor, by her next
friend Scott Nelson; M.N., aminor, by her next friend Scott
Nelson,Plaintiffs-Appellants,v.
IPARADIGMS, LLC,
Defendant-Appellee.

A.V., a minor, by his next friend
Robert Vanderhye; K.W., a minor,
by his next friend Kevin Wade,
Sr.; E.N., a minor, by her next
friend Scott Nelson; M.N., aminor, by her next friend Scott
Nelson,Plaintiffs-Appellees,v.
IPARADIGMS, LLC,
Defendant-Appellant.



No. 08-1424



No. 08-1480



Appeals from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, Senior District Judge.
(1:07-cv-00293-CMH-BRP)

2

A.V. v. IPARADIGMS, LLC

Argued: December 4, 2008
Decided: April 16, 2009
Before WILKINSON, MOTZ, and TRAXLER,
Circuit Judges.

Affirmed in part, reversed in part, and remanded by publishedopinion. Judge Traxler wrote the opinion, in which Judge
Wilkinson and Judge Motz joined.

COUNSEL
ARGUED: Robert Arthur Vanderhye, McLean, Virginia, forAppellants/Cross-Appellees. James F. Rittinger, SATTERLEE, STEPHENS, BURKE & BURKE, New York, New
York, for Appellee/Cross-Appellant. ON BRIEF: Joshua M.
Rubins, Justin E. Klein, SATTERLEE, STEPHENS, BURKE& BURKE, New York, New York, for Appellee/CrossAppellant.

OPINION
TRAXLER, Circuit Judge:
Plaintiffs brought this copyright infringement action against
defendant iParadigms, LLC, based on its use of essays andother papers written by plaintiffs for submission to their highschool teachers through an online plagiarism detection service
operated by iParadigms. See 17 U.S.C. § 501. iParadigms
asserted counterclaims alleging that one of the plaintiffs
gained unauthorized access to iParadigms’ online service inviolation of the Computer Fraud and Abuse Act, see 18

A.V. v. IPARADIGMS, LLC

3

U.S.C. §§ 1030(a)(5)(A)(iii) & (B)(i), and the Virginia Computer Crimes Act, see Va. Code Ann. § 18.2-152.1-18.2152.16. The district court granted summary judgment in favorof iParadigms on plaintiffs’ copyright infringement claim
based on the doctrine of fair use. See 17 U.S.C. § 107. On the
counterclaims, the district court granted summary judgment
against iParadigms based on its conclusion that iParadigms
failed to produce evidence that it suffered any actual or economic damages.
The parties cross appeal. We affirm the grant of summary
judgment on the plaintiffs’ copyright infringement claim, butreverse the summary judgment order as to iParadigms’ counterclaims and remand for further consideration.
I.
Defendant iParadigms owns and operates "Turnitin Plagiarism Detection Service," an online technology systemdesigned to "evaluate[ ] the originality of written works inorder to prevent plagiarism." S.J.A. 1. According to
iParadigms, Turnitin offers high school and college educators
an automated means of verifying that written works submitted
by students are originals and not the products of plagiarism.
When a school subscribes to iParadigms’ service, it typicallyrequires its students to submit their written assignments "viaa web-based system available at www.turnitin.com or via an
integration between Turnitin and a school’s course management system." S.J.A. 1-2. In order to submit papers online,
students "must be enrolled in an active class" and must "enter
the class ID number and class enrollment password" suppliedby the assigning professor. J.A. 240.
After a student submits a writing assignment, Turnitin performs a digital comparison of the student’s work with content
available on the Internet, including "student papers previously
submitted to Turnitin, and commercial databases of journal

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A.V. v. IPARADIGMS, LLC

articles and periodicals." S.J.A. 2.1 For each work submitted,
Turnitin creates an "Originality Report" suggesting a percentage of the work, if any, that appears not to be original. The
assigning professor may, based on the results of the Originality Report, further explore any potential issues.
The Turnitin system gives participating schools the optionof "archiving" the student works. When this option is
selected, Turnitin digitally stores the written works submitted
by students "so that the work becomes part of the databaseused by Turnitin to evaluate the originality of other student’s
works in the future." S.J.A. 2.2 The archived student works are
stored as digital code, and employees of iParadigms do notread or review the archived works.
To submit a paper to Turnitin, a student must create a user
profile on the web site, a process that requires the student toclick on "I Agree" under the "terms of agreement" or "Clickwrap Agreement." The Clickwrap Agreement provided,
among other things, that the services offered by Turnitin are"conditioned on [the user’s] acceptance without modificationof the terms, conditions, and notices contained herein," andthat "[i]n no event shall iParadigms . . . be liable for any . . .
damages arising out of or in any way connected with the useof this web site." J.A. 340.
When they initiated the lawsuit, the four plaintiffs wereminor high school students and thus appeared in this litigation
via their next friends. Plaintiffs A.V. and K.W. attended
1
The comparison occurs as follows: "[T]he Turnitin system makes a‘fingerprint’ of the work by applying mathematical algorithms to its content. This fingerprint is merely a digital code. Using the digital fingerprint
made of the student’s work, the Turnitin system compares the student’s
work electronically to content available on the Internet . . . and student
papers previously submitted to Turnitin." S.J.A. 2.
2
At the time plaintiffs filed this action, there were approximately 7,000
institutional Turnitin subscribers that, in turn, resulted in the submissionof about 125,000 papers each day.

A.V. v. IPARADIGMS, LLC

5

McLean High School in Fairfax County, Virginia, whichbegan using Turnitin in 2006 and opted to have its student
papers archived in the Turnitin data base. Plaintiffs E.N. and
M.N. attended Desert Vista High School in Tucson, Arizona,which also subscribed to the Turnitin service and elected thearchiving option. According to the complaint, both schools
required students to submit their written assignments via
Turnitin.com to receive credit; failure to do so would result ina grade of "zero" for the assignment under the policy of bothschools.
Plaintiffs K.W., E.N. and M.N. allege that their teachersadhered to school policy and required them to submit theirwritten assignments to Turnitin. Using the passwords provided by the schools, K.W., E.N. and M.N. submitted theirpapers, each of which included a "disclaimer" objecting to thearchiving of their works.3 As requested by the two highschools, however, each of these submissions was archived.
A.V., the fourth plaintiff, did not submit his paper for credit
in a high school course; instead, he submitted his work toTurnitin using a password designated for students enrolled ina college course at the University of California, San Diego("UCSD"). The password was provided to A.V. by plaintiffs’
counsel who obtained it by conducting an internet search.
According to iParadigms, "no one at iParadigms read[ ] orreview[ed] the [p]apers submitted" by plaintiffs, andiParadigms did not send any "[p]aper at issue in this action. . . to anybody other than the instructor to whom plaintiffs[ ]submitted their own papers." S.J.A. 2.
Plaintiffs filed a complaint alleging that iParadigms
infringed their copyright interests in their works by archiving
them in the Turnitin database without their permission.4 The
3Shortly before plaintiffs submitted their assignments to Turnitin, plaintiffs’ counsel applied for and was granted a copyright registration for each
paper at issue.
4
Plaintiffs also alleged that the Turnitin system offends copyright law
because it "may send a full and complete copy of a student’s unpublished6

A.V. v. IPARADIGMS, LLC

district court granted summary judgment to iParadigms on
two bases. First, the court found that the students andiParadigms entered into binding agreements when the students clicked on "I Agree," and that the agreements shielded
iParadigms from liability arising out of plaintiffs’ use of theTurnitin website. Furthermore, the court concluded that thedisclaimers included on plaintiffs’ written submissions did not"modify the Agreement or render it unenforceable." J.A. 50.5
Second, the court determined that iParadigms’ use of eachof the plaintiffs’ written submissions qualified as a "fair use"
under 17 U.S.C. § 107 and, therefore, did not constituteinfringement. In particular, the court found that the use wastransformative because its purpose was to prevent plagiarism
by comparative use, and that iParadigms’ use of the student
works did not impair the market value for high school term
papers and other such student works.
manuscript to an iParadigms client anywhere in the world upon request of
the client, and without the student’s permission." J.A. 22. Plaintiffs, however, have not produced any evidence to demonstrate that this occurredwith respect to the plaintiffs’ works at issue here. Accordingly, we confine
our review of the copyright issues to iParadigms’ practice of archiving
documents.
5
Plaintiffs offered two other theories upon which the district court could
find the Clickwrap Agreement unenforceable, which the court also
rejected. First, the district court disagreed that the agreement was an unenforceable adhesion contract, finding no evidence that plaintiffs were
coerced by iParadigms (as opposed to the schools). Second, the district
court refused to void the contract based on the doctrine of infancy, see Zelnick v. Adams, 561 S.E.2d 711, 715 (Va. 2002) ("[A] contract with an
infant is not void, only voidable by the infant upon attaining the age ofmajority."), concluding that plaintiffs cannot use this doctrine as a "sword"
to void a contract while retaining the benefits of the contract — highschool credit and standing to bring this action, cf. 5 Richard A. Lord, Williston on Contracts § 9.14 (4th ed.) ("When the infant has received consideration which he still possesses, . . . he cannot, upon reaching majority,
keep it and refuse to pay.")A.V. v. IPARADIGMS, LLC

7

iParadigms asserted four counterclaims, but only two are
now at issue: (1) that plaintiff A.V. gained unauthorizedaccess to Turnitin by using passwords designated for use bycollege students enrolled at UCSD, in violation of the Computer Fraud and Abuse Act ("CFAA"), see 18 U.S.C. § 1030;
and (2) that plaintiff A.V., based on the aforementioned unauthorized access, violated the Virginia Computer Crimes Act("VCCA"), see Va. Code Ann. § 18.2-152.3.
The district court rejected both counterclaims, granting
summary judgment to plaintiff A.V. on the grounds that there
was no evidence of actual or economic damages suffered by
iParadigms as a result of the alleged violations under the
CFAA and the VCCA.
II.

Plaintiffs’ Appeal

We first consider the summary judgment order as to plaintiffs’ copyright infringement claim. The owner of a copyrightenjoys "a bundle of exclusive rights" under section 106 of the
Copyright Act, Harper & Row, Publishers, Inc. v. Nation
Enters., 471 U.S. 539, 546 (1985), including the right to copy,
the right to publish and the right to distribute an author’s
work, see id. at 547; see also 17 U.S.C. § 106 (also including
among fundamental rights in copyrighted works rights to display, to perform, and to prepare derivative works). Theserights "vest in the author of an original work from the time ofits creation." Harper & Row, 471 U.S. at 547. "‘Anyone who
violates any of the exclusive rights of the copyright owner,’that is, anyone who trespasses into his exclusive domain byusing or authorizing the use of the copyrighted work . . . ‘isan infringer of the copyright.’" Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 433 (1984) (quoting
17 U.S.C. § 501(a)).
The ownership rights created by the Copyright Act, however, are not absolute; these rights, while exclusive, are "limited in that a copyright does not secure an exclusive right to8

A.V. v. IPARADIGMS, LLC

the use of facts, ideas, or other knowledge." Bond v. Blum,
317 F.3d 385, 394 (4th Cir. 2003). Rather, copyright protection extends only to the author’s manner of expression. See 17
U.S.C. § 102(b) ("In no case does copyright protection for an
original work . . . extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery,
regardless of the form in which it is described . . ."); Feist
Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 344-45(1991) ("The most fundamental axiom of copyright law is thatno author may copyright his ideas or the facts he narrates."(internal quotation marks and alteration omitted)).
Moreover, the copyright owner’s rights are subject to several exceptions enumerated by the Copyright Act. "[T]he definition of exclusive rights in § 106 of the [Copyright] Act isprefaced by the words ‘subject to sections 107 through [122].’
Those sections describe a variety of uses of copyrighted material that ‘are not infringements of copyright’ ‘notwithstanding
the provisions of § 106.’" Sony, 464 U.S. at 447 (quoting 17
U.S.C. § 106).
One of these statutory exceptions codifies the common-law"fair use" doctrine, which "allows the public to use not only
facts and ideas contained in a copyrighted work, but also
expression itself in certain circumstances." Eldred v. Ashcroft,
537 U.S. 186, 219 (2003); see Campbell v. Acuff-Rose Music,
Inc., 510 U.S. 569, 577 (1994) ("Congress meant § 107 torestate the present judicial doctrine of fair use . . . andintended that courts continue the common-law tradition of fairuse adjudication." (internal quotation marks omitted)). "Fromthe infancy of copyright protection, some opportunity for fairuse of copyrighted materials has been thought necessary to
fulfill copyright’s very purpose, ‘[t]o promote the Progress of
Science and useful Arts . . . .’" Campbell, 510 U.S. at 575(quoting U.S. Const., Art. I, § 8, cl. 8). Courts have traditionally regarded "fair use" of a copyrighted work as "a privilege
in others than the owner of the copyright to use the copyrighted material in a reasonable manner without his consent."

A.V. v. IPARADIGMS, LLC

9Harper & Row, 471 U.S. at 549 (internal quotation marks
omitted).
Thus, the copyright owner’s "monopoly . . . is limited andsubject to a list of statutory exceptions, including the exception for fair use provided in 17 U.S.C. § 107." Bond, 317 F.3d
at 393 (internal quotation marks and citation omitted). A person who makes fair use of a copyrighted work is not an
infringer even if such use is otherwise inconsistent with theexclusive rights of the copyright owner. See 17 U.S.C. § 107(providing that "the fair use of a copyrighted work . . . is not
an infringement of copyright"); cf. Bond, 317 F.3d at 394 ("Afair-use analysis bears relevance only when a challenged use
violates a right protected by the Copyright Act.").
Section 107 provides that "the fair use of a copyrighted
work . . . for purposes such as criticism, comment, news
reporting, teaching (including multiple copies for classroomuse), scholarship, or research, is not an infringement of copyright." 17 U.S.C. § 107. Congress provided four nonexclusive
factors for courts to consider in making a "fair use" determination:(1) the purpose and character of the use, including
whether such use is of a commercial nature or is fornonprofit educational purposes;(2) the nature of the copyrighted work;(3) the amount and substantiality of the portion usedin relation to the copyrighted work as a whole; and(4) the effect of the use upon the potential market foror value of the copyrighted work.
17 U.S.C. § 107. Section 107 contemplates that the questionof whether a given use of copyrighted material is "fair"requires a case-by-case analysis in which the statutory factors

10

A.V. v. IPARADIGMS, LLC

are not "treated in isolation" but are "weighed together, inlight of the purposes of copyright." Campbell, 510 U.S. at
578.
With these general principles in mind, we consider each of
the statutory factors.
First Factor
The first fair use factor requires us to consider "the purpose
and character of the use, including whether such use is of acommercial nature or is for nonprofit educational purposes."
17 U.S.C. § 107(1). A use of the copyrighted material that has
a commercial purpose "tends to weigh against a finding of fairuse." Harper & Row, 471 U.S. at 562. "The crux of the profit/nonprofit distinction is not whether the sole motive of theuse is monetary gain but whether the user stands to profit
from exploitation of the copyrighted material without paying
the customary price." Id.
In assessing the "character" of the use, we should consider
the specific examples set forth in section 107’s preamble,"looking to whether the use is for criticism, or comment, ornews reporting, and the like," with the goal of determining
whether the use at issue "merely supersedes the objects of theoriginal creation, or instead adds something new, with a further purpose or different character." Campbell, 510 U.S. at
578-79 (internal quotation marks, alteration and citation omitted). Courts, therefore, must examine "whether and to what
extent the new work is transformative . . . . [T]he more transformative the new work, the less will be the significance ofother factors, like commercialism, that may weigh against afinding of fair use." Id. at 579 (internal quotation marks omitted). A "transformative" use is one that "employ[s] the quoted
matter in a different manner or for a different purpose fromthe original," thus transforming it. Pierre N. Leval, Commentary, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105,
1111 (1990).

A.V. v. IPARADIGMS, LLC

11

In considering the character and purpose of iParadigms’ useof the student works, the district court focused on the questionof whether the use was transformative in nature. The court
concluded that "iParadigms, through Turnitin, uses the papers
for an entirely different purpose, namely, to prevent plagiarism and protect the students’ written works from plagiarism. . . by archiving the students’ works as digital code." J.A. 54.
Although the district court recognized that iParadigms intends
to profit from its use of the student works, the court found that
iParadigms’ use of plaintiffs’ works was "highly transformative," J.A. 54, and "provides a substantial public benefit
through the network of educational institutions using Turnitin." J.A. 55. Accordingly, the court concluded that the first
factor weighed in favor of a finding of fair use.
Plaintiffs argue the district court’s analysis contained several flaws. First, they suggest that the district court ignored
the commercial nature of iParadigms’ use of their materials,
highlighting the fact that iParadigms is a for-profit company
that enjoys millions of revenue dollars based on its everincreasing database of student works. Seizing upon theSupreme Court’s suggestion in Sony that "every commercial
use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belong to the owner ofthe copyright," 464 U.S. at 451, plaintiffs contend that thearchiving of their papers cannot constitute a fair use under
section 107.
The district court, however, did not ignore the fact that
iParadigms’ use of the plaintiffs’ works occurred in the commercial context; indeed, the court expressly noted that
"iParadigms makes a profit in providing this service to educational institutions." J.A. 55. But the fact that the disputed useof copyrighted material is commercial is not determinative inand of itself. See Sony, 464 U.S. at 448. As the Second Circuit
observed, "[s]ince many, if not most, secondary users seek atleast some measure of commercial gain from their use, unduly
emphasizing the commercial motivation of a copier will lead

12

A.V. v. IPARADIGMS, LLC

to an overly restrictive view of fair use." American Geophysical Union v. Texaco, Inc., 60 F.3d 913, 921 (2d Cir. 1994);
see Campbell, 510 U.S. at 584 (observing that "[i]f . . . commerciality carried presumptive force against a finding of fairness, the presumption would swallow nearly all of theillustrative uses listed in the preamble paragraph of § 107,"
which "are generally conducted for profit in this country"(internal quotation marks omitted)). The Court has made clearthat Sony did not establish a per se rule that a commercial use
barred a fair use finding. See Campbell, 510 U.S. at 585 ("TheCourt of Appeals’ elevation of one sentence from Sony to a
per se rule . . . runs as much counter to Sony itself as to thelong common-law tradition of fair use adjudication."). Thus,
although a commercial use finding generally weighs against
a finding of fair use, it must "be weighed along with [the]other factors in fair use decisions." Sony, 464 U.S. at 449
n.32.
In this case, the district court determined that the commercial aspect was not significant in light of the transformative
nature of iParadigms’ use. See Campbell, 510 U.S. at 578-79.
The district court simply weighed the commercial nature of
iParadigms’ use along with other fair use factors, as is appropriate under Supreme Court precedent. See id. at 579(explaining that "the more transformative the new work, theless will be the significance of other factors, like commercialism, that may weigh against a finding of fair use").
Plaintiffs also argue that iParadigms’ use of their works
cannot be transformative because the archiving process does
not add anything to the work — Turnitin merely stores thework unaltered and in its entirety. This argument is clearlymisguided. The use of a copyrighted work need not alter oraugment the work to be transformative in nature. Rather, it
can be transformative in function or purpose without altering
or actually adding to the original work. See, e.g., Perfect 10,
Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007)(concluding that Google’s use of copyrighted images inA.V. v. IPARADIGMS, LLC

13thumbnail search index was "highly transformative" eventhough the images themselves were not altered, in that the use
served a different function than the images served).
iParadigms’ use of plaintiffs’ works had an entirely different
function and purpose than the original works; the fact that
there was no substantive alteration to the works does not preclude the use from being transformative in nature.
Plaintiffs further contend that, even if iParadigms’ use of
their works has a transformative purpose, the use itself is nottransformative if it fails to effect such purpose. Plaintiffs
assert that there is at least a question of fact as to whether
Turnitin effectively prevents plagiarism such that summary
judgment is inappropriate. In support of this contention, plaintiffs offered evidence showing that it is possible to defeat theTurnitin system by paraphrasing the original copyrighted
work and that the system sometimes does not catch even verbatim copying. In other words, because the Turnitin system is
not fool-proof, the archiving of plaintiffs’ works to compareand detect plagiarism cannot be transformative.
We reject this assertion as well. The question of whether ause is transformative does not rise or fall on whether the use
perfectly achieves its intended purpose. Cf. Campbell, 510
U.S. at 582 (declining to evaluate the quality of the parody
and declaring that "when fair use is raised in defense of parody, [the threshold question] is whether a parodic charactermay reasonably be perceived"). Plaintiffs do not dispute that
the Turnitin system does detect some level of plagiarism, evenif, as they assert in the complaint, "[t]he Turnitin system iscapable of detecting only the most ignorant or lazy attempts
at plagiarism by students without significant monetary
resources." J.A. 21. Whether a better plagiarism detection system could be designed is not important to our analysis ofwhether the disputed use serves a different purpose or function.
The district court, in our view, correctly determined that thearchiving of plaintiffs’ papers was transformative and favored

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A.V. v. IPARADIGMS, LLC

a finding of "fair use." iParadigms’ use of these works wascompletely unrelated to expressive content and was instead
aimed at detecting and discouraging plagiarism.
Second Factor
In considering the nature of the copyrighted work, theSupreme Court has instructed that "fair use is more likely to
be found in factual works than in fictional works," whereas "ause is less likely to be deemed fair when the copyrighted work
is a creative product." Stewart v. Abend, 495 U.S. 207, 237(1990) (internal quotation marks and alteration omitted). Thispostulate recognizes the notion that a work is entitled togreater copyright protection as it comes closer to "the core ofcreative expression." Bond, 317 F.3d at 395. However, if the
disputed use of the copyrighted work "is not related to its
mode of expression but rather to its historical facts," then thecreative nature of the work is mitigated. Id. at 396. And, infact, the district court concluded that iParadigms’ use of theplaintiffs’ works "relate[d] solely to the comparative value ofthe works" and did not "diminish[ ] the incentive for creativity
on the part of students." J.A. 55. The district court noted that,
if anything, iParadigms’ use of the students’ works fostered
the development of original and creative works "by detecting
any efforts at plagiarism by other students." J.A. 55.
Plaintiffs contend that the district court’s application of thisfactor was flawed in two respects. First, they argue that the
court failed to account for the fact that their works were
unpublished. Because an author enjoys the "right to control
the first public appearance of his undisseminated expression,"
the fair use of an unpublished work is narrower in scope. Harper & Row, 471 U.S. at 555; see id. at 564 ("[T]he author’s
right to control the first public appearance of his expression
weighs against such use of the work before its release."). In
its order, the district court omits mention of this fact; therefore, plaintiffs suggest that the district court’s entire analysisof the second statutory factor is invalid.

A.V. v. IPARADIGMS, LLC

15

We disagree that the lack of an express reference to theunpublished status of plaintiffs’ works undermines the court’s
analysis under § 107(2). Not only has the Supreme Court
admonished courts to resist weighing the fair use factors in
isolation, see Campbell, 510 U.S. at 578, but Congress specifically provided that "[t]he fact that a work is unpublishedshall not itself bar a finding of fair use if such finding is madeupon consideration of all the above factors." 17 U.S.C. § 107.
Therefore, in Bond, we were able to conclude that the introduction into a court proceeding of an original work of fiction
constituted fair use under § 107 despite the fact that the copyrighted work was unpublished:That Bond’s manuscript is unpublished and contains
a stylized mode of expressing his feelings about historical facts weigh against a finding of fair use. But,
as Campbell instructs, we do not consider the § 107
factors in isolation from one another, but we weighthem together in light of the purposes of copyright.
Where, as here, the use of the work is not related toits mode of expression but rather to its historicalfacts and there is no evidence that the use of Bond’s
manuscript in the state legal proceedings would
adversely affect the potential market for the manuscript, one cannot say the incentive for creativity has
been diminished in any sense.
Id. at 395-96 (emphasis added) (internal quotation marks andcitations omitted). Here, the district court, quoting Bond, concluded that iParadigms’ use was unconnected to any creative
element in plaintiffs’ works. Given that the district court drewits language verbatim from a passage in Bond discussing thefair use of unpublished works of fiction, the district court
clearly did not ignore the unpublished nature of these works.
Moreover, it is clear that iParadigms’ use of plaintiffs’
works did not have the "intended purpose" or "incidental
effect" of supplanting plaintiffs’ rights to first publication.

16

A.V. v. IPARADIGMS, LLC

Harper & Row, 471 U.S. at 562. This is significant in that the
primary basis for the close scrutiny courts give the use of an
unpublished work is, as previously noted, an "author’s rightto control the first public appearance of his expression." Id. at564. iParadigms did not publicly disseminate or display plaintiffs’ works and did not send them to any third party "otherthan the instructor to whom plaintiffs submitted their own
papers." S.A. 2. In fact, the Turnitin digital archiving process
does not involve any review of the submitted works at all,even by those at iParadigms. Thus, no employee of
iParadigms read or reviewed the works submitted by plaintiffs. We find no basis whatsoever for concluding that
iParadigms’ use of the plaintiffs’ papers undermined theirright to first publication.
Plaintiffs contend that the district court’s consideration ofthe "nature of the copyrighted works" factor was flawed fora second reason: the district court ignored the fact that theworks in question were works of fiction and poetry, which areconsidered "highly creative" in nature and deserving of thestrongest protection. This argument is unpersuasive as well inthat the district court expressly acknowledged its obligation toconsider whether the works in question came within the "coreof creative expression." J.A. 55. Rather than ignore it, however, the district court simply concluded that even if the plaintiffs’ works were highly creative in nature, iParadigms’ use of
the plaintiffs’ works was not related to the creative core of theworks. In concluding that the second factor favored neither
plaintiffs nor iParadigms, the district court was merely applying Bond in which we concluded that the use of an unpublished work of fiction in a court proceeding constituted fairuse because such use was "not related to its mode of expression but rather to its historical facts." 317 F.3d at 396.
iParadigms’ use of the works in the case—as part of a digitized database from which to compare the similarity of typewritten characters used in other student works—is likewise
unrelated to any creative component. Thus, we find no fault
in the district court’s application of the second fair use factor.

A.V. v. IPARADIGMS, LLC

17

Third Factor
The third fair use factor requires us to consider "the amountand substantiality of the portion used in relation to the copyrighted work as a whole." 17 U.S.C. § 107(3). Generally
speaking, "as the amount of the copyrighted material that isused increases, the likelihood that the use will constitute a‘fair use’ decreases." Bond, 317 F.3d at 396. But this statutory
factor also requires courts to consider, in addition to quantity,the "quality and importance" of the copyrighted materials
used, Campbell, 510 U.S. at 587, that is, whether the portionof the copyrighted material was "the heart of the copyrighted
work." Sundeman v. The Seajay Soc’y, Inc., 142 F.3d 194,
205 (4th Cir. 1998) (internal quotation marks omitted).
Although "[c]opying an entire work weighs against finding afair use, . . . it does not preclude a finding of fair use"; therefore, "[t]he extent of permissible copying varies with the purpose and character of the use." Id. at 205-06 (internal
quotation marks omitted) (emphasis added).
The district court found that this factor, like the second factor, did not favor either party. The court concluded that
although iParadigms uses substantially the whole of plaintiffs’
works, iParadigms’ "use of the original works is limited inpurpose and scope" as a digitized record for electronic "comparison purposes only." J.A. 56. Having already concluded
that such use of plaintiffs’ works was transformative, the district court concluded that iParadigms’ use of the entirety ofplaintiffs’ works did not preclude a finding of fair use.
The plaintiffs contend that the district court erred by referring to the transformative nature of iParadigms’ use in its
analysis of the amount and substantiality of the portion of the
copyrighted work used under § 107(3). In our view, the district court did not analytically merge the first and third fairuse factors by referring to iParadigms’ transformative use of
the students’ works. Plaintiffs’ argument, in fact, fails to recognize the overlap that exists between the fair use factors. The

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A.V. v. IPARADIGMS, LLC

first and third factors, for example, take into account to somedegree the purpose of the disputed use. Compare 17 U.S.C.
§ 107(1); and Sundeman, 142 F.3d at 202 (explaining that"[t]he ‘further purpose’ and ‘different character’ of [thedefendant’s use] make it transformative" under § 107(1)),
with Bond, 317 F.3d at 396 (concluding that § 107(3) did notfavor plaintiffs because the defendant’s "sole purpose andintent" was not to use the expressive content in the plaintiffs’
works but "to obtain admissions of fact" in a court proceeding). We find no error in the district court’s analysis.
Fourth Factor
Finally, § 107 directs us to examine the market of the copyrighted work to determine "the effect of the use upon thepotential market for or value of the copyrighted work." 17
U.S.C. § 107(4). The Supreme Court described this factor as
the "single most important element of fair use," Harper &Row, 471 U.S. at 566, considering that a primary goal of
copyright is to ensure that "authors [have] the opportunity torealize rewards in order to encourage them to create." Leval,
Toward a Fair Use Standard, 103 Harv. L. Rev. at 1124. Bycontrast, "a use that has no demonstrable effect upon thepotential market for, or the value of, the copyrighted workneed not be prohibited in order to protect the author’s incentive to create." Sony, 464 U.S. at 450.
Our task is to determine whether the defendants’ use ofplaintiffs’ works "would materially impair the marketabilityof the work[s] and whether it would act as a market substitute" for them. Bond, 317 F.3d at 396. We focus here notupon "whether the secondary use suppresses or even destroys
the market for the original work or its potential derivatives,
but [upon] whether the secondary use usurps the market of theoriginal work." NXIVM Corp. v. The Ross Institute, 364 F.3d
471, 482 (2nd Cir. 2004) (emphasis added). An adverse market effect, in and of itself, does not preclude application of thefair use defense. "The fair use doctrine protects against aA.V. v. IPARADIGMS, LLC

19republication which offers the copyrighted work in a secondary packaging, where potential customers, having read thesecondary work, will no longer be inclined to purchase again
something they have already read." Sundeman, 142 F.3d at
207 (internal quotation marks omitted).
The analysis of whether the disputed use offers a market
substitute for the original work overlaps to some extent with
the question of whether the use was transformative. See
Campbell, 510 U.S. at 591 (distinguishing a secondary usethat simply duplicates an original work in its entirety, thereby
superseding it, from a secondary use that is transformative).
To the extent this issue arises in fair use cases, it often does
so when the secondary use at issue involves a scholarly critique or parody of the original work. See Campbell, 510 U.S.
at 592 ("[T]he role of the courts is to distinguish between biting criticism that merely suppresses demand and copyright
infringement, which usurps it." (internal quotation marks andalterations omitted)); see also Sundeman, 142 F.3d at 207(holding that defendant’s critique of a novel "did not have thepurpose or effect of supplanting the copyrighted work" andthat its use of the novel was transformative and thus did not
create a market substitute for the original work); Davis v. The
Gap, Inc., 246 F.3d 152, 175 (2d Cir. 2001) (explaining that"[i]f the harm resulted from a transformative secondary usethat lowered the public’s estimation of the original (such as adevastating review of a book that quotes liberally from theoriginal to show how silly and poorly written it is), this transformative use will be found to be a fair use, not withstanding
the harm").
But regardless of whether the defendant used the original
work to critique or parody it, the transformative nature of theuse is relevant to the market effect factor. See Suntrust Bankv. Houghton Mifflin Co., 268 F.3d 1257, 1274 n.28 (11th Cir.
2001) ("Whereas a work that merely supplants or supersedes
another is likely to cause a substantially adverse impact on thepotential market of the original, a transformative work is less

20

A.V. v. IPARADIGMS, LLC

likely to do so." (internal quotation marks omitted)); Davis,
246 F.3d at 176 (noting that "the market effect must be evaluated in light of whether the secondary use is transformative").
The district court concluded that iParadigms’ Turnitin system did not serve as a market substitute or even harm the market value of the works, highlighting the deposition testimonyof the plaintiffs — each of whom denied that iParadigms’"impinged on the marketability of their works or interferedwith their use of the works." J.A. 58. The district court also
noted that, although the pleadings alleged iParadigms’ use
would adversely impact plaintiffs’ ability to market theirworks to other high school students seeking to purchase completed term papers or essays, each plaintiff indicated that suchtransactions were dishonest and that he or she would not sell
their original works for submission by other students.
Furthermore, the court rejected plaintiffs’ contention that
iParadigms’ use would adversely impact the value of theworks if a recipient such as a college admissions department
or a literary journal used the Turnitin system to verify originality. Because their works are now archived, plaintiffs
argued, the Turnitin system would report that their own original works were plagiarized. In light of how the Turnitin system works, the district court rejected the argument as
speculative at best:
Anyone who is reasonably familiar with Turnitin’s
operation will be able to recognize that the identicalmatch is not the result of plagiarism, but simply the
result of Plaintiff’s earlier submission. Individuals
familiar with Turnitin, such as those in the field of
education, would be expecting the works submitted
to have been previously submitted.
J.A. 59.

A.V. v. IPARADIGMS, LLC

21

On appeal, plaintiffs’ primary contention is that the district
court focused on whether there was evidence of actual damages, failing to consider the effect of iParadigms’ use on the"potential market" for plaintiffs’ works.6 Clearly, this assertion is incorrect. The district court considered the potential
market effects suggested by plaintiffs but concluded thatplaintiffs’ arguments were theoretical and speculative. Plaintiffs’ most plausible theory was that iParadigms’ archiving of
their papers impaired the sale of the papers to high school students in the market for unpublished term papers, essays andthe like. Undoubtedly, there is a market for students who wish
to purchase such works and submit them as their own for academic credit.7 And, iParadigms’ archiving of such papers on
the Turnitin website might well impair the marketability ofsuch works to student buyers intending to submit works they
did not author without being identified as plagiarists.
As noted by the district court, however, the plaintiffs testified that they would not sell the works at issue here to any
dealer in such a market because such a transaction would
make them party to cheating and would encourage plagiarism.
Furthermore, to the extent that iParadigms’ use would
adversely affect plaintiffs’ works in this particular market, wemust consider the transformative nature of the use. Clearly nomarket substitute was created by iParadigms, whose archived
student works do not supplant the plaintiffs’ works in the"paper mill" market so much as merely suppress demand forthem, by keeping record of the fact that such works had beenpreviously submitted. Cf. Davis, 246 F.3d at 175 (noting thatfair use occurs where "the harm resulted from a transforma6

Plaintiffs note emphatically that the fourth statutory fair use factor"specifically uses the word ‘potential’ . . . and nowhere uses the word‘damage.’" Brief of Appellants at 29. This point of emphasis is somewhat
ironic in that the district court did not use the word "damage" either, but
did discuss potential market effect.
7
Web sites such as www.ibuytermpapers.com, for example, offer completed papers and essays purchased from high school students.

22

A.V. v. IPARADIGMS, LLC

tive secondary use that lowered the public’s estimation of theoriginal" rather than from a market substitute). In our view,
then, any harm here is not of the kind protected against by
copyright law.
The plaintiffs offer a few additional theories under which
iParadigms’ use of their papers could conceivably affect marketability. For example, plaintiffs point to the possibility that
if they submitted all or a portion of their own works to a periodical for publishing or to a college admissions board, and themagazine or college used Turnitin, then their submitted works
might potentially be discredited as a product of plagiarism.
Like the district court, we conclude that these theories are
implausible in light of how the Turnitin system generally
operates. We find nothing in the record to suggest that any ofthese scenarios envisioned by plaintiffs are anything morethan unfounded speculation.
In sum, we conclude, viewing the evidence in the lightmost favorable to the plaintiffs, that iParadigms’ use of thestudent works was "fair use" under the Copyright Act and that
iParadigms was therefore entitled to summary judgment on
the copyright infringement claim.8
III.

iParadigms’ Cross Appeal
A.

iParadigms asserted a counterclaim against plaintiff A.V.
under the Computer Fraud and Abuse Act ("CFAA"), see 18
U.S.C. § 1030, a statute generally intended to deter computer
hackers.9 Although the CFAA is primarily a criminal statute,
8

In light of our "fair use" analysis, we decline to address the questionof whether the terms of the Clickwrap Agreement created an enforceable
contract between plaintiffs and iParadigms.
9See, e.g., Charlotte Decker, Note, Cyber Crime 2.0: An Argument toUpdate the United States Criminal Code to Reflect the Changing Natureof Cyber Crime, 81 S. Cal. L. Rev. 959, 980-81 (2008) ("The CFAA,§ 1030(a)(5), is the primary tool used to investigate and prosecute hacking
crimes.").

A.V. v. IPARADIGMS, LLC

23

it permits private parties to bring a cause of action to redress
a violation of the CFAA: "Any person who suffers damage orloss by reason of a violation of this section may maintain acivil action . . . to obtain compensatory damages and injunctive relief or other equitable relief." 18 U.S.C. § 1030(g).
iParadigms alleged that by gaining unauthorized access toTurnitin through a password assigned to UCSD students,
plaintiff A.V. violated § 1030(a)(5)(A)(iii), which prohibited
any person from "intentionally access[ing] a protected computer without authorization, and as a result of such conduct,caus[ing] damage," and, by such conduct, caused, in violationof § 1030(a)(5)(B)(i), "loss to 1 or more persons during any
1-year period . . . aggregating at least $5,000 in value." Additionally, the CFAA imposed this limit: "Damages for a violation involving only . . . [§ 1030(a)(5)(B)(i)] are limited toeconomic damages." 18 U.S.C. § 1030(g) (emphasis added).10
iParadigms offered evidence that when it learned that A.V.
was able to register and submit papers as a student of a university in which he was not enrolled and had never attended,
it feared the possibility of a technical glitch in the Turnitin
system and concluded an investigation was necessary.
Unaware that A.V. had simply obtained a password posted on
the Internet, iParadigms assigned several employees to determine what happened. According to iParadigms, over thecourse of about one week, numerous man-hours were spent
responding to A.V.’s use of the UCSD password.
The district court concluded that iParadigms’ counterclaim
failed as a matter of law because § 1030(g) limited damages
10

The CFAA was amended after the district court issued its decision inthis case. See Pub.L. 110-326, § 204(a). These amendments largely reorganized § 1030, but left subsection (g) essentially intact and do not bear
upon the limited issue before the panel — whether the district court correctly interpreted "economic damages" as that terms is used in § 1030(g).
We take no position, of course, as to what effect, if any, the amendments
otherwise have on the legal sufficiency of iParadigms’ CFAA counterclaim.

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A.V. v. IPARADIGMS, LLC

for a violation of § 1030(a)(5)(B)(i) to "economic damages."
The court found that iParadigms "failed to produce any evidence of actual or economic damages," J.A. 64, and "onlypresented evidence of consequential damages resulting fromthe steps taken by iParadigms in response to A.V.’s submissions." J.A. 63. Implicit in the district court’s conclusion was
the assumption that "economic damages" in § 1030(g) does
not encompass any "consequential damages" whatsoever.
iParadigms counters that "economic damages" ought to beaccorded its ordinary meaning, which would include consequential damages but exclude recovery for pain and sufferingor emotional distress. See Creative Computing v. Getloaded.com LLC, 386 F.3d 930, 935 (9th Cir. 2004) (concludingthat the "economic damages" limitation "precludes damages
for death, personal injury, mental distress, and the like" but
includes "loss of business and business goodwill"). We agree
that the district court construed the "economic damages" provision too narrowly. To maintain a civil action under the
CFAA, a person first must have "suffer[ed] damage or loss byreason of a violation of this section." 18 U.S.C. § 1030(g).
The CFAA defines "loss" as "any reasonable cost to any victim, including the cost of responding to an offense, conducting a damage assessment, and restoring . . . the system . . . toits condition prior to the offense, and any revenue lost, cost
incurred, or other consequential damages incurred because ofinterruption of service." 18 U.S.C. § 1030(e)(11) (emphasis
added). This broadly worded provision plainly contemplatesconsequential damages of the type sought by iParadigms —costs incurred as part of the response to a CFAA violation,
including the investigation of an offense. See, e.g., Modis, Inc.
v. Bardelli, 531 F. Supp. 2d 314, 320 (D. Conn. 2008) (notingthat "the costs of responding to the offense are recoverable"
including "costs to investigate and take remedial steps" (internal quotation marks omitted)); SuccessFactors, Inc. v. Softscape, Inc., 544 F. Supp. 2d 975, 980-81 (N.D. Cal. 2008)(holding that the cost of investigating and identifying the
CFAA offense, including "many hours of valuable time away

A.V. v. IPARADIGMS, LLC

25from day-to-day responsibilities, causing losses well in excess
of $5,000," qualified as "cost[s] of responding to an offense"
under § 1030(e)(11)).
Accordingly, we remand for further consideration of thisclaim, expressing no opinion as to whether the evidence isotherwise sufficient to establish a viable CFAA claim orwhether the alleged consequential damages were reasonable,
sufficiently proven, or directly causally linked to A.V.’s
alleged CFFA violation.
B.
iParadigms asserted another counterclaim against plaintiff
A.V. under the Virginia Computer Crimes Act ("VCCA"),
which provides that "[a]ny person who uses a computer orcomputer network, without authority and . . . [o]btains property or services by false pretenses . . . is guilty of the crimeof computer fraud." Va. Code Ann. § 18.2-152.3. Moreover,"[a]ny person who willfully obtains computer services without authority is guilty of the crime of theft of computer services." Va. Code Ann. § 18.2-152.6. Section 18.2-152.12
provides that "any person whose property or person is injured
by reason of a violation of [the VCCA] . . . may sue therefor
and recover for any damages sustained and the costs of suit."
The factual basis for this counterclaim was essentially thesame as that for the CFAA counterclaim — that A.V., a Virginia resident, obtained access to the Turnitin service by using
passwords and enrollment codes that A.V. did not have authorization to use. The district court granted summary judgment
to A.V. on iParadigms’ VCCA claim, as it had on the CFAA
claim, based on its conclusion that iParadigms failed to present evidence of actual or economic damages caused by
A.V.’s submission of papers as a UCSD student.
iParadigms contends that because the district court rejected
the CFAA and the VCCA counterclaims for the same reasons,the district court was necessarily construing the phrase "any

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A.V. v. IPARADIGMS, LLC

damages" under the VCCA to exclude consequential damages. iParadigms suggests that there is no indication in thestatute that the Virginia General Assembly intended to solimit the meaning of "any damages." Finding nothing in thestatute to suggest that consequential damages are not available
under section 18.2-152.12, we agree that it was error to dismiss the VCCA claim solely on this basis. Moreover, wedecline A.V.’s invitation to affirm on other grounds, such as
the lack of evidence to establish a causal link between thesubmission of A.V.’s paper and any damages, consequential
or otherwise.
We conclude that the evidence of consequential damages
presented by iParadigms came within the "any damages" language of the VCCA, and therefore that the district court erroneously granted summary judgment because there was noevidence of "actual or economic damages." We express no
opinion, however, as to whether iParadigms is a "person
whose property or person is injured by reason of a violationof [the VCCA]," Va. Code Ann. § 18.2-152.12, or whether
this claim is otherwise viable.
IV.
For the foregoing reasons, we affirm the order of the district court granting summary judgment to iParadigms as toplaintiffs’ copyright infringement claim. As to iParadigms’
counterclaims, however, we reverse the grant of summary
judgment to plaintiffs and remand for further consideration.
AFFIRMED IN PART,REVERSED IN PART,AND REMANDED