Market Effects Bearing on Fair Use

INTRODUCTIONCopyright law, which promotes the creation of cultural and artistic works by protecting these works from being copied, excuses infringement that is deemed to be a fair use.1 A fair use of a copyrighted work is generally one that would promote the general advancement of art and culture, even if it falls within the scope of a third party's copyright protection. A court determines whether an otherwise infringing work is a fair use by weighing at least four factors, one of which is the effect of the otherwise infringing work on the market for the copyrighted work.2 Many scholars have long been troubled by courts' conclusory, or circular, analyses of this factor.3 A prominent treatise on fair use calls this factor "[t]he least understood, and, as a consequence, most misapplied."4 Sometimes, courts will summarily conclude that a copyright owner is harmed by the infringer's failure to license the copyrighted work, which, on its own, counts against any alleged infringement being a fair use.5 Other times, courts will just as abruptly exclude certain market effects, such as markets for criticism,6 from their consideration of this fair use factor, thereby deeming these uses to be fair with regard to this factor.7 With such short-circuited analyses, courts can expand or diminish the scope of what constitutes fair use without the penetrating justifications this factor's examination deserves.8In Campbell v. Acuff-Rose Music, Inc.,9 the Supreme Court issued a foundational ruling on the contours of the fair use doctrine when it held that transformative works, such as parodies, will frequently be fair uses and thus immune from classification as copyright infringement.10 In applying the law's four-factor fair use analysis, the Court emphasized that transformative works are important contributions to society unless they cause relevant harm to the copyright owner's market (from which the Court excluded a market for criticism).11I argue that the Campbell decision opened the door to a laudable analytical framework for the bearing of market effects on fair use. However, the Court obfuscated this framework by not underscoring its reasoning for this fair use factor, which has meant that many-though not all-courts continue to offer malnourished or unreasonable analyses of this factor.This Article seeks to excavate Campbell's skeletal framework and to add analytical flesh and heft to it. Campbell can be read to improve consideration of market effects bearing on fair use in two ways. First, Campbell supports a more full-bodied investigation of the market effects-both harms and benefits-of defendants' works on plaintiffs' copyrighted works.12 One can infer as much from a combination of Campbell's analytical steps: placing a strong emphasis on the value of transformative works, differentiating different sorts of market effects, and recognizing the strong connections between a copyrighted work and a transformative work making use of it. Implicit in this reasoning is the possibility that works that transform existing material can draw attention to, enhance, or affirm the original work's role in the marketplace.Approximately twenty years after Campbell, some courts have begun to recognize that market benefits ought to count in favor of finding that a defendant's use is fair.13 The recent fair use decision in the Southern District of New York on Google Book Search is one such example. 14 Similarly, copyright holders-including those that have been litigiously protective of their copyrighted material in the past, such as Disney15- are increasingly acting in ways that suggest they realize that certain unauthorized third-party uses of their copyrighted works can redound to their financial benefit. For instance, Disney has opted not to rein in those who have covered, parodied, or built on the songs, characters, and other material from its hit movie Frozen.16A court's appreciation that market harms and benefits can both matter in assessing fair use helps eliminate conclusory reasoning. …