Opinion ID: 4644700
Heading Depth: 3
Heading Rank: 4

Heading: The Potential Market for or Value of Seuss

Text: Weighs Against Fair Use The fourth and final fair use factor considers “the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107(4). Courts must address “not only the extent of market harm caused by the particular actions of the alleged infringer, but also ‘whether unrestricted and widespread conduct of the sort engaged in by the defendant would result in a substantially adverse impact on the potential market’ for the original” and “the market for derivative works.” Campbell, 510 U.S. at 590 (quotation marks and citations omitted). Having found that Boldly was transformative—a conclusion with which we disagree—the district court also erred in shifting the burden DR. SEUSS ENTERPRISES V. COMICMIX LLC 25 to Seuss with respect to market harm. That shifting, which is contrary to Campbell and our precedent, led to a skewed analysis of the fourth factor. Mindful of the Court’s directive to “eschew[] presumptions under this factor, we refrain from presuming harm in the potential market” for commercial uses and “determine it in the first instance.” Monge, 688 F.3d at 1181. Still, we recognize that ComicMix’s non-transformative and commercial use of Dr. Seuss’s works likely leads to “cognizable market harm to the original.” Campbell, 510 U.S. at 591; see Penguin Books, 109 F.3d at 1403 (“Because, on the facts presented, [the defendants’] use of [the Cat] original was nontransformative, and admittedly commercial, we conclude that market substitution is at least more certain, and market harm may be more readily inferred.”). Not much about the fair use doctrine lends itself to absolute statements, but the Supreme Court and our circuit have unequivocally placed the burden of proof on the proponent of the affirmative defense of fair use. ComicMix tries to plow a new ground in contending that fair use is not an affirmative defense and that the burden shifts to Seuss to prove potential market harm. Campbell squarely forecloses this argument: “[s]ince fair use is an affirmative defense, its proponent would have difficulty carrying the burden of demonstrating fair use without favorable evidence about relevant markets.” Campbell, 510 U.S. at 590 (footnote omitted); see also Harper & Row, 471 U.S. at 561. We have echoed that principle. “[F]air use is an affirmative defense,” thus requiring the defendant to “bring forward favorable evidence about relevant markets.” Penguin Books, 109 F.3d at 1403; see Monge, 688 F.3d at 1170 (“As with all 26 DR. SEUSS ENTERPRISES V. COMICMIX LLC affirmative defenses, . . . the defendant bears the burden of proof” on fair use.). 6 In an effort to distinguish controlling precedent, ComicMix argues that in Lenz v. Universal Music Corp., we deviated from our precedent construing fair use as an affirmative defense. 815 F.3d 1145 (9th Cir. 2016). This view misreads Lenz, which involved fair use in a different corner of the copyright law, the safe harbor for Internet service providers under the Digital Millennium Copyright Act (DMCA). We held that to avoid liability under 17 U.S.C. § 512(f), a copyright holder must “consider the existence of fair use before sending a takedown notification.” Id. at 1151, 1153; see 17 U.S.C. § 512(c)(3)(A). More pointedly, we examined the nature of fair use emphatically “for the purposes of the DMCA,” and explicitly went on to note that in that context, “fair use is uniquely situated in copyright law so as to be treated differently than traditional affirmative defenses.” Lenz, 815 F.3d at 1153. In no way did we deviate from our characterization of fair use as an affirmative defense under § 107. To the contrary, in addition to clarifying that, unlike copyright misuse and laches, fair use is not an excuse to copyright infringement, we reiterated that “the burden of proving fair use is always on the putative infringer.” Id. at 1152–53 (quoting Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1542 n.22 (11th Cir. 1996)). Hence, ComicMix, as the proponent of the affirmative defense of fair use, “must bring forward favorable evidence 6 Although the Eleventh Circuit has suggested that it is sometimes “reasonable to place on Plaintiffs the burden of going forward with evidence on” the fourth factor, see Cambridge Univ. Press v. Patton, 769 F.3d 1232, 1279 (11th Cir. 2014), we have never adopted this view. DR. SEUSS ENTERPRISES V. COMICMIX LLC 27 about relevant markets.” Penguin Books, 109 F.3d at 1403. Because ComicMix’s position is that it does not bear the burden of proof, it does not argue the adequacy of its scant evidence. ComicMix principally relies on the expert report of Professor Joshua Gans. The entire report is premised on Boldly being transformative, which it is not, and on the expert’s misunderstanding about fair use and U.S. copyright law. But even if we put aside the false premises of the report, and, for the sake of argument, credit its methodology and conclusions, the report fails to account for key fourth-factor considerations. 7 We conclude that ComicMix did not meet its burden on the fourth factor. First, ComicMix sidesteps the fact that it intentionally targeted and aimed to capitalize on the same graduation market as Go!. The planned release date for the first publication of Boldly was scheduled to launch “in time for school graduations.” ComicMix acknowledged that Boldly’s use of Go! will “resonate so much, especially as a graduation gift for folks who grew up reading Seuss.” The assertion that the two works target different age groups is undermined by ComicMix’s own admission that Boldly is “safe” for five-year-olds and “a perfect gift for children and adults of all ages.” Nor does ComicMix address a crucial right for a copyright holder—the derivative works market, an area in which Seuss engaged extensively for decades. See 17 U.S.C. § 106(2). A relevant derivative works market includes 7 Seuss moved to exclude the Gans report under Federal Rule of Evidence 702. The district court denied the motion as moot because it did not rely on the report. We do not review the district court’s ruling or otherwise offer our view on the motion. We simply note that even if the Gans report is an admissible expert opinion, it would be insufficient to tilt the fourth factor in ComicMix’s favor. 28 DR. SEUSS ENTERPRISES V. COMICMIX LLC “those that creators of original works would in general develop or license others to develop.” Campbell, 510 U.S. at 592. Seuss has already vetted and authorized multiple derivatives of Go!, including the following books: Oh, The Things You Can Do That Are Good For You!; Oh, the Places I’ll Go! By ME, Myself; Oh, Baby, the Places You’ll Go!; and Oh, the Places I’ve Been! A Journal. Recently, Seuss announced that it has partnered with Warner Animation Group to adapt Go! into an animated motion picture, scheduled for theatrical release in 2027. See Dave McNary, Dr. Seuss’ ‘Cat in the Hat’ Spinoff and ‘Oh, The Places You’ll Go’ Getting Movie Adaptations, Variety (Oct. 1, 2020). Works like Boldly would curtail Go!’s potential market for derivative works. This is not a case where the copyist’s work fills a market that the copyright owner will likely avoid, as is true for “a lethal parody” or “a scathing theater review.” Campbell, 510 U.S. at 591–92. In fact, ComicMix hoped to get to one of the potential markets for Seuss’s derivative works before Seuss, believing that Seuss would “want to publish it themselves and give [ComicMix] a nice payday.” Crucially, ComicMix does not overcome the fact that Seuss often collaborates with other creators, including in projects that mix different stories and characters. Seuss routinely receives requests for collaborations and licenses, and has entered into various collaborations that apply Seuss’s works to new creative contexts, such as the television and book series entitled The Wubbulous World of Dr. Seuss, a collaboration with The Jim Henson Company, famous for its puppetry and the creation of other characters like the Muppets. Other collaborations include a digital game called Grinch Panda Pop, that combines Jam City’s DR. SEUSS ENTERPRISES V. COMICMIX LLC 29 Panda character with a Grinch character; figurines that combine Funko Inc.’s toy designs with Seuss characters; and a clothing line that combines Comme des Garçons’ heart design with Grinch artwork. ComicMix takes issue with Seuss’s apparent choice not to license a mash-up based on Dr. Seuss’s works sans Dr. Seuss’s characters. We say “apparent” because ComicMix only infers, from Seuss’s style guide for its licensees, that Seuss will not license a Seuss–Star Trek mash-up. But, of course, that claim is speculative because ComicMix never asked for a license or permission. Also, the law does not limit the scope of the relevant market to products that are already made or in the pipeline. “The potential market . . . exists independent of the [copyright owner]’s present intent.” Monge, 688 F.3d at 1181. Seuss certainly has the right to “the artistic decision not to saturate those markets with variations of their original,” Castle Rock Ent., 150 F.3d at 146, and it has the right “to change [its] mind,” Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 1110, 1119 (9th Cir. 2000). Finally, ComicMix does not address a central aspect of market harm set out in Campbell—“whether unrestricted and widespread conduct of the sort engaged in” by ComicMix would undermine Seuss’s potential market. 510 U.S. at 590 (quotation marks and citation omitted). This aspect is particularly significant here because of Seuss’s strong brand. ComicMix’s effort to use Seuss’s success against it falls flat. As noted by one of the amici curiae, the unrestricted and widespread conduct of the sort ComicMix is engaged in could result in anyone being able to produce, without Seuss’s permission, Oh the Places Yoda’ll Go!, Oh the Places You’ll Pokemon Go!, Oh the Places You’ll Yada 30 DR. SEUSS ENTERPRISES V. COMICMIX LLC Yada Yada!, and countless other mash-ups. 8 Thus, the unrestricted and widespread conduct of the sort engaged in by ComicMix could “create incentives to pirate intellectual property” and disincentivize the creation of illustrated books. Monge, 688 F.3d at 1182. This is contrary to the goal of copyright “[t]o promote the Progress of Science.” U.S. Const. art. I, § 8, cl. 8. The bottom line is that ComicMix created, without seeking permission or a license, a non-transformative commercial work that targets and usurps Go!’s potential market. ComicMix did not carry its burden on the fourth factor. Based on our weighing of the statutory factors “in light of the purposes of copyright,” we conclude that ComicMix cannot sustain a fair use defense. See Campbell, 510 U.S. at 578. The district court erred in granting summary judgment in favor of ComicMix.