Source: https://h2o.law.harvard.edu/cases/5213
Timestamp: 2019-10-15 14:50:02
Document Index: 399072482

Matched Legal Cases: ['§ 106', '§ 106', '§ 501', '§ 106', '§ 107', '§ 1331', '§ 1338', '§ 1292', '§ 102', '§ 107']

Video Pipeline, Inc. v. Buena Vista Home Entertainment, Inc. | 342 F 3d 191 | August 26, 2003
[192] [193] [194] Paul R. Fitzmaurice (Argued), Lisa A. Sabatino, Pelino & Lentz, Philadelphia, PA, for Appellant.
Before: BECKER,[1] NYGAARD, and AMBRO, Circuit Judges.
Video Pipeline challenges the injunction on the ground that its internet use of the clip previews is protected by the fair use doctrine and, alternatively, that appellees Buena Vista Home Entertainment, Inc. and Miramax Film Corp.[2] may not receive the benefits of copyright protection because they have engaged in copyright misuse. We reject both arguments, and affirm.
Video Pipeline compiles movie trailers onto videotape for home video retailers to [195] display in their stores. To obtain the right to distribute the trailers used in the compilations, Video Pipeline enters into agreements with various entertainment companies. It entered into such an agreement, the Master Clip License Agreement ("License Agreement"), with Disney in 1988, and Disney thereafter provided Video Pipeline with over 500 trailers for its movies.
Video Pipeline stores the clip previews in its database and displays them on the internet in the same way it had displayed the Disney trailers. In content, however, the clip previews differ from the trailers. Each clip preview opens with a display of the Miramax or Disney trademark and the title of the movie, then shows one or two scenes from the first half of the movie, and closes with the title again. Disney's trailers, in contrast, are designed to entice sales from a target market by using techniques such as voice-over, narration, editing, and additional music. Video Pipeline's [196] clip previews use none of these marketing techniques.[3]
Video Pipeline amended its complaint to seek a declaratory judgment allowing it to use the clip previews. Disney filed a counterclaim alleging copyright infringement. The District Court entered a preliminary injunction, later revised, prohibiting Video Pipeline from displaying clip previews of Disney films on the internet. See Video Pipeline, Inc. v. Buena Vista Home Entertainment, Inc., 192 F.Supp.2d 321 (D.N.J.2002). Video Pipeline appeals.[4]
Subject to the fair use exception discussed below (and other exceptions not relevant here), copyright owners have the exclusive right (1) to reproduce the copyrighted work, (2) to prepare derivative works, (3) to distribute copies, (4) to perform [197] publicly a copyrighted motion picture, and (5) to display publicly the individual images of a copyrighted motion picture. 17 U.S.C. § 106. To make out a prima facie case of copyright infringement for preliminary injunction purposes, Disney needed to show that the display of the clip previews likely violates any provision of § 106. See 17 U.S.C. §§ 501(a), (b).[5] The District Court held that Video Pipeline's clip previews likely infringe Disney's exclusive rights under three of § 106's provisions: subsection (2), concerning derivative works; subsection (4), dealing with public performance of motion pictures; and subsection (5), relating to public display of individual images of a motion picture.
Congress's constitutional power to provide for copyright protection "is intended to motivate the creative activity of authors ... by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired." Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 429, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984). At times, however, "rigid application of the copyright statute ... would stifle the very creativity which that law is designed to foster." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994). When that is the case, the fair use doctrine may be implicated.
(4) the effect of the use upon the potential market for or value of the copyrighted work. [198] Id. The four statutory factors "do not represent a score card that promises victory to the winner of the majority." Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1110 (1990). Rather, each factor is "to be explored, and the results weighed together, in light of the purposes of copyright." Campbell, 510 U.S. at 578, 114 S.Ct. 1164 (citations omitted). Thus, as we apply copyright law, and the fair use doctrine in particular, we bear in mind its purpose to encourage "creative activity" for the public good. Sony Corp., 464 U.S. at 429, 104 S.Ct. 774.
Video Pipeline asserts that its use of the clip previews substantially transforms the full-length films from which they derive because the clips and the movies have different purposes. According to Video Pipeline, the original works have an aesthetic and entertainment purpose while the clip previews serve only to provide information about the movies to internet users or as advertisements for the company's retail web site clients.[6] To the extent [199] that the character and purpose of the clip previews and the original full-length films diverge, however, the clips share the same character and purpose as Disney's derivative trailers. Whatever informational or promotional character and purpose the trailers possess, so do the clip previews. Consequently, the clips are likely to "supersede the objects of" Disney's derivatives. Campbell, 510 U.S. at 579, 114 S.Ct. 1164 (citations omitted).[7] Although the clips are copied from Disney's original rather than its derivative works, it is highly relevant to our inquiry here that the clips will likely serve as substitutes for those derivatives.
Video Pipeline also urges us to take into account the functional character and purpose of the database in which it stores trailers and clip previews, apparently hoping we will discern no significant difference between its database and the internet search engine used in Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir.2003).[8] In Kelly, Arriba Soft Corp.'s search engine located images on other web sites in response to a user's request and displayed the results in thumbnail-size pictures, with a link that would take the user to the web site on which the image was found. Id. at 815. The Court held that the display of the thumbnail images was a fair use. Id.
Finally, we note that Video Pipeline's clip previews — to reiterate, approximately two-minute excerpts of full-length films with movie title and company trademark shown — do not add significantly to Disney's original expression. Video Pipeline itself asserts, and the District Court found, 192 F.Supp.2d at 337, that the clip previews [200] "involved no new creative ingenuity." The Court did recognize that deciding which scene or scenes to include in a clip preview requires some creative choice. Id. But as Video Pipeline disclaims the use of any creative ingenuity, we have no difficulty viewing those decisions as involving creativity only in a theoretical, and most narrow, sense. Hence, it is dubious what "new expression, meaning, or message" Video Pipeline has brought to its copies. Campbell, 510 U.S. at 579, 114 S.Ct. 1164.
Video Pipeline argues that this factor nonetheless weighs in its favor because Disney released to the public its movies, if not all of its trailers, prior to Video Pipeline's display of the clip previews.[9] It is true that Disney would have a stronger case against fair use had it not yet made its movies available for the public's viewing pleasure. See id. at 554, 105 S.Ct. 2218 ("[T]he unpublished nature of a work is a key ... factor tending to negate a defense [201] of fair use.") (quoting S.Rep. No. 94-473 at 64 (1975)) (alteration and quotation marks in original omitted).
[202] As mentioned above, this final factor "must take [into] account not only ... harm to the original but also ... harm to the market for derivative works." Campbell, 510 U.S. at 590, 114 S.Ct. 1164. Because the issues pertaining to the potential harm to the market for Disney's derivative trailers are more straightforward, we focus our analysis on this area and do not review the District Court's conclusion as to harm to the market for the original full-length films.[10] It is in this context that we conclude that the fourth factor weighs in Disney's favor.
Video Pipeline argued in the District Court that no market exists, or could exist, for movie previews because no one "ever paid or will ever pay any money merely to see trailers." But in fact retail websites are paying Video Pipeline to display both trailers and clip previews. Moreover, Video Pipeline takes too narrow a view of the harm contemplated by this fourth factor. The statute directs us to consider "the effect of the use upon the . . . value of the copyrighted work," not only the effect upon the "market," however narrowly that term is defined. § 107(4); see also Worldwide Church of God v. Philadelphia Church of God, Inc., 227 F.3d 1110, 1119 (9th Cir.2000) (drawing such a distinction). And the value "need not be limited to monetary rewards; compensation may take a variety of forms." Id.; see also Sony Corp., 464 U.S. at 447 n. 28, 104 S.Ct. 774 (stating in a different context that the "copyright law does not require a copyright owner to charge a fee for the use of his works, and ... the owner of a copyright may well have economic or noneconomic reasons for permitting certain kinds of copying to occur without receiving direct compensation from the copier").
We have already determined that the clip previews lack transformative quality and that, though the clips are copies taken directly from the original full-length films rather than from the trailers, display of the clip previews would substitute for the derivative works. As a result, the clips, if Video Pipeline continues to stream them over the internet, will "serve[] as a market replacement" for the trailers, "making it [203] likely that cognizable market harm to the [derivatives] will occur." Campbell, 510 U.S. at 591, 114 S.Ct. 1164. For instance, web sites wishing to show previews of Disney movies may choose to enter licensing agreements with Video Pipeline rather than Disney, as at least 25 have already done. And internet users searching for previews of Disney films may be drawn by the clip previews to web sites other than Disney's, depriving Disney of the opportunity to advertise and sell other products to those users.[11]
Video Pipeline further contends that Disney has misused its copyright and, as a result, should not receive the protection of copyright law. Video Pipeline points to certain licensing agreements that Disney has entered into with three companies and sought to enter into with a number of other companies operating web sites.[12] Each of these licensing agreements provides that Disney, the licensor, will deliver trailers by way of hyperlinks[13] for display on the licensee's web site. The Agreements further state:
The Website in which the Trailers are used may not be derogatory to or critical of the entertainment industry or of [Disney] (and its officers, directors, agents, employees, affiliates, divisions and subsidiaries) or of any motion picture produced or distributed by [Disney] ... [or] of the materials from which the Trailers were taken or of any person involved with the production of the Underlying Works. Any breach of this paragraph will render this license null and void and Licensee will be liable to all parties concerned for defamation and copyright infringement, as well as breach of contract....
Neither the Supreme Court nor this Court has affirmatively recognized the copyright misuse doctrine. See Dun & Bradstreet Software Servs., Inc. v. Grace Consulting, Inc., 307 F.3d 197, 221 (3d [204] Cir.2002). There is, however, a well-established patent misuse doctrine, see, e.g., Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363 (1942); W.L. Gore & Assocs., Inc. v. Carlisle Corp., 529 F.2d 614 (3d Cir.1976), and, as noted below, other courts of appeals have extended the doctrine to the copyright context.
Anti-competitive licensing agreements may conflict with the purpose behind a copyright's protection by depriving the public of the would-be competitor's creativity. [205] The fair use doctrine and the refusal to copyright facts and ideas also address applications of copyright protection that would otherwise conflict with a copyright's constitutional goal. See Eldred, 123 S.Ct. at 789; Campbell, 510 U.S. at 575 & n. 5, 114 S.Ct. 1164. But it is possible that a copyright holder could leverage its copyright to restrain the creative expression of another without engaging in anti-competitive behavior or implicating the fair use and idea/expression doctrines.[14]
Although Rosemont Enters. did not concern an anti-competitive licensing agreement as in the typical misuse case, it focused — as do the misuse cases — on the copyright holder's attempt to disrupt a copyright's goal to increase the store of creative expression for the public good. 366 F.2d at 311 ("It would be contrary to the public interest to permit any man to buy up the copyright to anything written about himself and to use his copyright ownership to restrain other[s] from publishing biographical material concerning him."); Lasercomb, 911 F.2d at 978 ("[T]he company is required to forego utilization of the creative abilities of all its officers, directors and employees in the area of [computer assisted design and computer assisted manufacture] die-making software. Of yet greater concern, these creative abilities are withdrawn from the public."). A copyright holder's attempt to restrict expression that is critical of it (or of its copyrighted good, or the industry in which it [206] operates, etc.) may, in context, subvert — as do anti-competitive restrictions — a copyright's policy goal to encourage the creation and dissemination to the public of creative activity.
Regardless, the record indicates that Disney will likely incur incalculable losses from the clip previews' competition with the trailers — especially in terms of internet users' attraction to (and the "stickiness" of) Disney's and others' web sites [207] and the concomitant opportunities for sales and marketing on those sites. Disney will therefore likely suffer irreparable harm if Video Pipeline is not enjoined. Moreover, given the verbatim copying, lack of creative ingenuity, and profit-driven purpose of the clip previews, we have no concern that this case is one in which the creative and expressive goals of copyright law would be served better by denying an injunction. See Campbell, 510 U.S. at 578 n.10, 114 S.Ct. 1164.
[1] Judge Becker concluded his term as Chief Judge on May 4, 2003.
[2] Buena Vista holds an exclusive license to distribute Miramax and Walt Disney Pictures and Television home videos. Buena Vista, Miramax, and Walt Disney Pictures and Television are subsidiaries of The Walt Disney Co. Because of this connection and for simplicity's sake, we refer to the appellees collectively and individually as "Disney."
[3] We have reviewed as part of the record several of the clip previews and trailers.
[4] The District Court's jurisdiction arose under 28 U.S.C. § 1331 and 28 U.S.C. § 1338. We have jurisdiction over this interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1).
[5] There is no dispute as to Disney's copyright ownership in the full-length motion pictures at issue.
[6] We note that the clip previews do not constitute mere "information" about the movies, as would, for example, a list of the names of the actors starring in a film, or a statement of the rating it received. Were Video Pipeline dealing only in this type of information, the fair use doctrine might not be implicated at all because copyright protection does not include facts and ideas, but only their expression. See Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 547, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985); 17 U.S.C. § 102(b). Regardless, the clips are part of — not information about — Disney's expressive creations. See id. at 569, 105 S.Ct. 2218 ("Any copyright infringer may claim to benefit the public by increasing public access to the copyrighted work.").
Additionally, it is not clear to us that the use of a copy — not accompanied by any creative expression on the part of the copier — as an advertisement for the original would qualify as a type of use intended to be recognized by the fair use doctrine. See Campbell, 510 U.S. at 578-79, 114 S.Ct. 1164 ("The enquiry [under the first factor] may be guided by the examples given in the preamble to § 107, looking to whether the use is for criticism, or comment, or news reporting, and the like . . . ."); id. at 585, 114 S.Ct. 1164 ("The use, for example, of a copyrighted work to advertise a product, even in a parody, will be entitled to less indulgence under the first factor of the fair use enquiry than the sale of a parody for its own sake, let alone one performed a single time by students in school.").
[7] We see little significance in whether the trailers use marketing techniques that the clip previews do not.
[8] A database is a discrete collection of data (here, previews) set up for efficient retrieval. By comparison, a search engine refers to a system that locates data (or images, etc.) from other web sites; thus, a search engine will retrieve data that is not in the engine operator's control. VideoPipeline.net is a database, not a search engine.
[9] The record does suggest that Video Pipeline streamed over the internet clip previews of some Disney movies not yet released to the public.
[10] The District Court declined to consider the potential harm to the market for derivatives on the ground that Disney had not argued the issue. Disney did, however, so argue in both its briefs in support of its motion for a preliminary injunction, and it submitted evidence to support those arguments. Video Pipeline also responded in the District Court to the merits of Disney's arguments concerning potential harm to the market for its derivative works. Consequently, Video Pipeline suffers no harm by our addressing this issue.
[11] Record evidence indicates that clip previews were streamed over the internet more than 30,000 times between November 2000 and April 2001.
[12] The record contains three signed licensing agreements and numerous letters sent by Disney to other companies asking them to sign the same agreement.
[13] A hyperlink allows an internet user to connect to another web site.
[14] See Note, Clarifying the Copyright Misuse Defense: The Role of Antitrust Standards and First Amendment Values, 104 Harv. L. Rev. 1289, 1304-06 (1991) (advocating application of the copyright misuse defense where "the plaintiff has improperly used its copyright power to restrain free trade in ideas," and explaining: "The copyright misuse defense provides a necessary complement to the idea/expression dichotomy [under which an author's expression may be copyrighted, but an idea may not] and fair use doctrine in vindicating the public interest in the dissemination of ideas. The idea/expression limitation merely restricts the scope of the particular copyright being sued upon, and absent a claim of misuse, it cannot be brought to bear on improper licensing restrictions or other misconduct. As with the misuse defense, fair use doctrine excuses copying that would otherwise be infringement in order to vindicate the copyright policy promoting the diffusion of ideas. Unlike misuse doctrine, however, the fair use inquiry directs courts' attention to the social value of the defendant's conduct rather than the social harm caused by the plaintiff's use of its copyright.").
Decision date: 2003-08-26
Author: Ambro
Citations: 342 F 3d 191
Docket Numbers: No. 02-2497