Court Opinion

ID: 801804
Source: CourtListenerOpinion
Date Created: 2012-06-07 13:43:07+00
Date Added: 2024-06-11T18:00:01.615107
License: Public Domain

In the

United States Court of Appeals
              For the Seventh Circuit

No. 11-2620

B ROWNMARK F ILMS, LLC,
                                             Plaintiff-Appellant,

                               v.

C OMEDY P ARTNERS, et al.
                                          Defendants-Appellees.

           Appeal from the United States District Court
               for the Eastern District of Wisconsin.
          No. 10-cv-01013-JPS—J.P. Stadtmueller, Judge.

      A RGUED JANUARY 17, 2012 —D ECIDED JUNE 7, 2012

  Before E ASTERBROOK, Chief Judge, and C UDAHY and
H AMILTON, Circuit Judges.
  C UDAHY, Circuit Judge. This is a case about how a court
may dispose of a copyright infringement action based
on the fair use affirmative defense while avoiding
the burdens of discovery and trial. This case also poses
the interesting question of whether the incorporation-by-
reference doctrine applies to audio-visual works.
2                                                No. 11-2620

  South Park is a popular animated television show in-
tended for mature audiences. The show centers on
the adventures of foul-mouthed fourth graders in the small
town of South Park, Colorado. It is notorious for its distinct
animation style and scatological humor. The show fre-
quently provides commentary on current events and pop-
culture through parody and satire. Previous episodes
have dealt with the Florida Recount, the aftermath
of hurricane Katrina and the phenomenon of celebrity
sex tapes.
  This case involves one episode entitled “Canada On
Strike,” which satirized the 2007-2008 Writers’ Guild
of America strike, inexplicably popular viral videos and
the difficulty of monetizing Internet fame. In the episode,
the nation of Canada goes on strike, demanding a share
of the “Internet money” they believe is being generated
by viral videos and other online content. The South Park
Elementary school boys —Cartman, Stan, Kyle and But-
ters —decide to create a viral video in order to
accrue enough “Internet money” to buy off the striking
Canadians. The boys create a video, “What What (In
The Butt),” (WWITB) in which Butters sings a paean to
anal sex. Within the show, the video is a huge hit, but
the boys are only able to earn “theoretical dollars.”
  This video is a parody of a real world viral video of
the same name, featuring an adult male singing and
dancing in tight pants. The two versions of WWITB are
very similar. The South Park version recreates a large
portion of the original version, using the same angles,
framing, dance moves and visual elements. However, the
No. 11-2620                                               3

South Park version stars Butters, a naïve nine-year old, in
a variety of costumes drawing attention to his innocence:
at various points he is dressed as a teddy bear, an astro-
naut and a daisy.
   Brownmark Films, LLC (Brownmark), the copyright
holder for the original WWITB video, filed suit against
South Park Digital Studios (SPDS) and others for copyright
infringement under the Copyright Act of 1976, 17 U.S.C.
§§ 101 et seq. Brownmark’s complaint referenced both
versions of WWITB, but it did not attach either work to
the complaint. SPDS responded claiming the South Park
version was clearly fair use under § 107, attached the
two works and moved for dismissal for failure to state
a claim under Fed. R. Civ. P. 12(b)(6). Brownmark did
not address the substance of SPDS’s fair use defense,
but instead argued that the court could not consider fair
use on a 12(b)(6) motion to dismiss. The district
court concluded that “[o]ne only needs to take a fleeting
glance at the South Park episode” to determine that its
use of the WWITB video is meant “to lampoon the recent
craze in our society of watching video clips on the internet
. . . of rather low artistic sophistication and quality”—in
other words, fair use. The court granted SPDS’s motion
to dismiss based on the fair use affirmative defense.
  Brownmark appeals, arguing that an unpleaded affirma-
tive defense of fair use is an improper basis for granting a
motion to dismiss under Rule 12(b)(6), and that in
any event, SPDS’s WWITB video is not a fair use of the
original WWITB video. We hold that the district court
could properly decide fair use on SPDS’s motion, and we
affirm the district court’s finding of fair use.
4                                                 No. 11-2620

                              I.
  Brownmark correctly notes that courts should usually
refrain from granting Rule 12(b)(6) motions on affirmative
defenses. United States v. Lewis, 411 F.3d 838, 842 (7th
Cir. 2005). Rule 12(b)(6) tests whether the complaint states
a claim for relief, and a plaintiff may state a claim
even though there is a defense to that claim. The mere
presence of a potential affirmative defense does not render
the claim for relief invalid. Further, these defenses typically
turn on facts not before the court at that stage in
the proceedings. But when all relevant facts are presented,
the court may properly dismiss a case before discov-
ery —typically through a Rule 12(c) Motion for Judgment on
the Pleadings 1 —on the basis of an affirmative defense. See
id.; Brooks v. Ross, 578 F.3d 574, 579 (7th Cir. 2009) (approv-
ing of granting motions to dismiss based on the statute of
limitations when “the relevant dates [that establish the
defense] are set forth unambiguously in the complaint.”).
  Despite Brownmark’s assertions to the contrary, the only
two pieces of evidence needed to decide the question
of fair use in this case are the original version of WWITB
and the episode at issue. Brownmark’s copyright infringe-
ment claim in its amended complaint was limited to
the distribution of one episode on television, South
Park’s website, iTunes and Amazon.com, and DVD and

1
  Though district courts have granted Rule 12(b)(6) motions on
the basis of affirmative defenses and this court has affirmed
those dismissals, we have repeatedly cautioned that the proper
heading for such motions is Rule 12(c), since an affirmative
defense is external to the complaint.
No. 11-2620                                                  5

Blu-Ray discs of “South Park Season 12 (Uncensored).”
Because the claim was limited to the production
and distribution of a single episode, the district court
was correct to rely solely on the two expressive works
referenced in Brownmark’s amended complaint and
attached to SPDS’s motion, as well as the allegations in
the complaint, to decide on the fair use defense.
   SPDS relies on the incorporation-by-reference doctrine to
maintain that reliance on the attached works does not
violate Rule 12(d), which requires that Rule 12(b)(6)
or 12(c) motions containing materials outside of
the pleadings be converted into motions for summary
judgment. It is well settled that in deciding a Rule 12(b)(6)
motion, a court may consider “documents attached to
a motion to dismiss . . . if they are referred to in the plain-
tiff’s complaint and are central to his claim.” Wright
v. Assoc. Ins. Cos. Inc., 29 F.3d 1244, 1248 (7th Cir. 1994).
In effect, the incorporation-by-reference doctrine provides
that if a plaintiff mentions a document in his complaint,
the defendant may then submit the document to the court
without converting defendant’s 12(b)(6) motion to a motion
for summary judgment. The doctrine prevents a plaintiff
from “evad[ing] dismissal under Rule 12(b)(6) simply
by failing to attach to his complaint a document
that prove[s] his claim has no merit.” Tierney v. Vahle,
304 F.3d 734, 738 (7th Cir. 2002).
  While the application of this doctrine to the present case
would seem to allow SPDS’s action, no court of appeals
has ruled that the content of television programs and
similar works may be incorporated by reference. Several
6                                                No. 11-2620

district courts have concluded that the doctrine does
apply to such works. See, e.g., Burnett v. Twentieth
Century Fox, 491 F. Supp. 2d 962, 966 (C.D. Cal. 2007);
Zella v. E.W. Scripps Co., 529 F. Supp. 2d 1124, 1131-32 (C.D.
Cal. 2007); Daly v. Viacom, 238 F. Supp. 2d 1118, 1121-22
(N.D. Cal. 2002). And we think it makes eminently
good sense to extend the doctrine to cover such
works, especially in light of technological changes that
have occasioned widespread production of audio-visual
works. The parties, however, did not brief this
issue, and so we reserve the resolution of the question
for a later date.

                             II.
  Following the recent trend of heightened pleading
standards, as in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), SPDS
argues that we should encourage courts to consider
affirmative defenses on 12(b)(6) motions and thereby
reduce the threat of nuisance suits. We are sympathetic
to the goal of curtailing nuisance suits, but we feel that
there is no need to enlarge the role of 12(b)(6) motions,
as there are already two other rules that address the
situation of dismissing baseless suits before discovery:
Rule 12(c) Motion for Judgment on the Pleadings and
Rule 56 Motion for Summary Judgment. Had SPDS’s
motion been captioned as a motion for summary judgment,
the district court would have employed procedure essen-
tially identical to procedure following a 12(b)(6) motion.
No. 11-2620                                                7

  It appears SPDS’s reason for relying on the
incorporation-by-reference doctrine for its motion to
dismiss, rather than simply captioning its motion as
a motion for summary judgment, was its concern that such
a maneuver would open the door to discovery. The ex-
pense of discovery, which SPDS stressed at oral argument,
looms over this suit. SPDS, and amicus, the Electronic
Frontier Foundation, remind this court that infringement
suits are often baseless shakedowns. Ruinous discovery
heightens the incentive to settle rather than defend these
frivolous suits. But discovery would only follow a Rule 56
motion if the district court granted a request for discovery.
District courts need not, and indeed ought not, allow
discovery when it is clear that the case turns on facts
already in evidence.
  In this case, Brownmark did not request discovery.
Brownmark claims that it could not, as the matter before
the court was a 12(b)(6) motion, which does not allow
for discovery requests. But this is hard to believe. The
caption on a motion does not have some independent
authority that litigants or courts must respect. Rather
than relying on the notion that consideration of a fair
use defense in the context of a 12(b)(6) motion was prema-
ture, Brownmark could have provided a list of possible
evidence that would support its infringement claim
and defeat SPDS’s fair use defense. Indeed, Brownmark
provides such a list in its briefs. Brownmark argues that it
should be allowed to discover: the intent of SPDS at
the time the episode was created; all relevant video images
or clips, especially where such uses are divorced from
the Episode; and pre-airing licensing information related
8                                                  No. 11-2620

to the Episode. We noted during oral argument that such
a broad discovery request, surely entailing expensive e-
discovery of emails or other internal communications,
gives Brownmark the appearance of a “copyright troll.”
We are confident that the district court would have refused
to grant such expansive demands.
  Therefore, rather than decide whether the videos may be
incorporated-by-reference in SPDS’s motion to dismiss,
we elect to treat SPDS’s motion as a motion for summary
judgment. SPDS ought to have captioned the motion
as such, 2 but the miscaptioning in this case should not have
caused confusion, as the procedures for both motions
are essentially the same. The only possible disadvantage
to the plaintiff was the lack of notice, see Edward Gray
Corp. v. Nat’l Union Fire Ins. Co., 94 F.3d 363, 366 (7th Cir.

2
  Adopting this posture would have given SPDS greater
freedom in setting out its fair-use defense. In its reply brief,
Brownmark makes much of the fact that SPDS mentions Butters’
naïveté, but had not introduced evidence on Butters’ innocent
nature. While we do not feel that this case turns on any such
naïveté, SPDS could have introduced previous South Park
episodes to show that Butters has repeatedly demonstrated
a lack of understanding of sex. See, e.g., Butters’ Very Own
Episode (Comedy Central television broadcast Dec. 12, 2001)
(perceiving sex as wrestling), see also Cartman Sucks (Comedy
Central television broadcast Mar. 14, 2007); Stupid Spoiled
Whore Video Playset (Comedy Central television broadcast Dec.
1, 2004). Indeed, in one of these episodes, Butters is dressed
in the same teddy bear costume he wears in the WWITB video.
Stupid Spoiled Whore Video Playset (Comedy Central
television broadcast Dec. 1, 2004).
No. 11-2620                                                9

1996), but this error is harmless when the opponent
opposing the motion could not have offered any evidence
in response. And as we noted above, the district court
required only the two videos to adjudicate this issue,
especially in light of Brownmark’s failure to make
any concrete contention that the South Park episode
reduced the financial returns from the original WWITB
video. The district court could properly consider an
affirmative defense in the context of a motion for summary
judgment, which it did here, regardless of the caption
SPDS used.

                             III.
  Having confirmed that the district court could properly
dismiss the suit on the basis of an affirmative defense
at this early stage of the proceedings, all that remains is
to determine if the district court erred in its fair use
determination. This matter is simple because Brownmark,
in response to SPDS’s motion, did not address fair use
as applied to the WWITB videos, and instead insisted
that the court could not consider the matter at a 12(b)(6)
stage. Since Brownmark never opposed SPDS’s fair use
argument in the district court, we consider the argument
waived.
  However, even if Brownmark were not barred from
offering argument that SPDS did not engage in fair use,
we agree with the district court that this is an obvious case
of fair use. When a defendant raises a fair use defense
claiming his or her work is a parody, a court can
often decide the merits of the claim without discovery or a
10                                               No. 11-2620

trial. When the two works in this case are viewed side-by-
side, the South Park episode is clearly a parody of the
original WWITB video, providing commentary on the
ridiculousness of the original video and the viral nature of
certain YouTube videos.
  The Copyright Act of 1976 sets forth four, non-exclusive
factors that a court must consider in determining whether
a particular use of a copyrighted work is a fair use: “(1) the
purpose and character of the use . . . ; (2) the nature of
the copyrighted work; (3) the amount and substantiality
of the portion used in relation to the copyrighted work
as a whole; and (4) the effect of the use upon the potential
market for or value of the copyrighted work.” 17 U.S.C.
§ 107 (2006). We consider each factor in turn, ultimately
agreeing with the district court’s analysis and findings.
  Central to determining the purpose and character of a
work is whether the new work merely supersedes
the original work, or instead adds something new with
a further purpose or of a different character.
Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994).
The underlying purpose and character SPDS’s work
was to comment on and critique the social phenomenon
that is the “viral video.” Brownmark’s video exemplifies
the “viral video.” Through one of the South Park
characters —the innocent and naïve Butters —SPDS
imitates viral video creation while lampooning one particu-
larly w ell-k n ow n e x am p le of su c h a video.
Moreover, the episode places Butters’ WWITB video
alongside other YouTube hits including, among others, the
Numa Numa Guy, the Sneezing Panda and the Afro Ninja.
No. 11-2620                                                 11

This kind of parodic use has obvious transformative
value, which under § 107 is fair use. See § 107 (preamble);
Campbell, 510 U.S. at 579 (“[P]arody, like other comment
or criticism, may claim fair use under § 107.”).
  The creative and expressive nature of the original
WWITB places the work within the core of copyright
protection. But this factor only establishes that the original
elements of WWITB are protected to the outer bounds of
copyright protection, which is defined by fair use. In the
case of parody, this factor offers little help to Brownmark
because “parodies almost invariably copy publicly known,
expressive works.” Id. at 586.
   Regarding the third factor, SPDS’s use of the original
WWITB was not insubstantial. Certainly, SPDS used
the “heart” of the work; the work’s overall design and
distinctive visual elements. Harper & Row, Publrs. v.
Nation Enters., 471 U.S. 539, 565 (1985). But in the context of
parody, “[c]opying does not become excessive in relation
to parodic purpose merely because the portion taken
was the original’s heart.” Campbell, 510 U.S. at 588. Parody
therefore “presents a difficult case.” Id. Indeed, it may
even seem as an anomaly under fair use that parody, a
favored use, must use a substantial amount of qualitative
and quantitative elements to create the intended allusion;
there are few alternatives. But when parody achieves
its intended aim, the amount taken becomes reasonable
when the parody does not serve as a market substitute
for the work. See id. (“[H]ow much more is reasonable
will depend . . . on the extent to which the [work’s] over-
riding purpose and character is to parody the original or,
12                                              No. 11-2620

in contrast, the likelihood that the parody may serve as a
market substitute for the original.”). The South Park
WWITB is clearly a parody and has not supplanted the
original WWITB.
  It follows from the third factor that SPDS’s parody
cannot have an actionable effect on the potential market for
or value of the original WWITB video under the fourth
factor. As the South Park episode aptly points out, there
is no “Internet money” for the video itself on YouTube,
only advertising dollars that correlate with the number
of views the video has had. It seems to this court that
SPDS’s likely effect, ironically, would only increase
ad revenue. Any effect on the derivative market for
criticism is not protectable. Id. at 592. And the plaintiff
has failed to give the district court or this court
any concrete suggestion about potential evidence indicat-
ing that the South Park parody has cut into any real market
(with real, non-Internet dollars) for derivative uses of
the original WWITB video.
  We agree with the district court’s well-reasoned and
delightful opinion. For these reasons, the judgment of the
district court is A FFIRMED.

                           6-7-12