Opinion ID: 474082
Heading Depth: 3
Heading Rank: 4

Heading: Effect Upon Potential Market or Value

Text: 40 Finally, we must consider the effect of the use upon the potential market for or value of the copyrighted work. 17 U.S.C. Sec. 107(4). This last factor is undoubtedly the single most important element of fair use. Harper & Row, 105 S.Ct. at 2234. See also 3 Nimmer Sec. 13.05[A] at 13-76. The purpose of copyright is to create incentives for creative effort. Sony Corp., 464 U.S. at 450, 104 S.Ct. at 793. [A] use that has no demonstrable effect upon the market for, or the value of, the copyrighted work need not be prohibited in order to protect the author's incentive to create. Id. Therefore, [f]air use, when properly applied, is limited to copying by others which does not materially impair the marketability of the work which is copied. Harper & Row, 105 S.Ct. at 2234 (quoting 1 Nimmer Sec. 1.10[D] at 1-87). 41 In the instant case, the parties disagree over whether the Defendants copied the parody for commercial or noncommercial uses. Every commercial use of copyrighted material is presumptively an unfair exploitation of a copyright owner's monopoly; accordingly, the likelihood of future harm may be presumed. Sony Corp., 464 U.S. at 451, 104 S.Ct. at 793. Whereas, when the use is noncommercial, the copyright owner must demonstrate by a preponderance of the evidence that there is some meaningful likelihood of future harm. Id. (emphasis in the original). The owner, however, need only show that, should the challenged use become widespread, it would adversely affect the potential market for the work. Id.; Harper & Row, 105 S.Ct. at 2234-35. 42 In determining whether the use has harmed the work's value or market, courts have focused on whether the infringing use: (1) tends to diminish or prejudice the potential sale of [the] work, Meeropol v. Nizer, 560 F.2d at 1070; or (2) tends to interfere with the marketability of the work, Elsmere Music, Inc. v. National Broadcasting Co., 482 F.Supp. 741, 747 (S.D.N.Y.),aff'd, 623 F.2d 252 (2d Cir.1980); or (3) fulfills the demand for the original work, Wainwright Securities Inc. v. Wall Street Transcript Corp., 558 F.2d 91, 96 (2d Cir.1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 759 (1978); Berlin v. E.C. Publications, Inc., 329 F.2d 541, 545 (2d Cir.), cert. denied, 379 U.S. 822, 85 S.Ct. 46, 13 L.Ed.2d 33 (1964). 43 The parody was first published September 27 and was off the newsstands before the defendants' first mailings in November. Thus, the republication did not diminish the initial sales. We agree with the district court that the effect on the marketability of back issues of the entire magazine is de minimis because it is only one page of a publication which would be purchased for its other attractions. 44 Nor have the Defendants' mailings effected any potential market, even though the parody could be licensed independently of the magazine. 12 Although the Defendants used the parody for a commercial purpose in the sense that they profited from copying it, they did not actually sell the copies to willing buyers. Instead the Defendants used the copies to generate moral outrage against their enemies and thus stimulate monetary support for their political cause. Moreover, as the district court noted, Moral Majority or Old Time Gospel Hour members would probably not be counted among Hustler's readers. Therefore, Hustler's creative incentives are not decreased because the Defendants are profiting from an activity that Hustler could not have taken advantage of. See Pacific and Southern Co., 744 F.2d at 1496. Where the copy does not compete in any way with the original ... concern [about copiers undercutting demand and discouraging creativity] is absent. Consumers Union, 724 F.2d at 1051. 45 The Defendants' use could not have diminished any potential sales, interfered with the marketability of the parody or fulfilled the demand for the original work. Therefore, even viewing the Defendants' copying as a commercial use, Defendants have rebutted any presumption of unfair exploitation of Hustler's copyright monopoly.