How Will The Latest “Fair Use” Decision Shape Copyright Law Governing Artificial Intelligence?

How Will The Latest “Fair Use” Decision Shape Copyright Law Governing Artificial Intelligence?

The U.S. Supreme Court’s latest fair use decision involving Andy Warhol’s use of copyrighted images of music icon Prince will have widespread implications far beyond the use of such images.  The precedential copyright case and decision will certainly impact emerging issues including, among others, the use artificial intelligence (AI) by restricting the boundaries of “transformative use” and related issues. 

The Dispute Over “Fair Use” of the Prince Photograph

As discussed in prior posts, Andy Warhol Foundation v. Goldsmith involved a series of silkscreen prints and pencil illustrations created by the iconic visual artist Andy Warhol, one of the most famous pop artists in the world.  Warhol’s works at issue were based on a 1981 photograph of music icon Prince taken and copyrighted by photographer Lynn Goldsmith.  In 1984, Goldsmith’s agency licensed the photograph to Vanity Fair magazine for use as an artist reference.  Goldsmith was unaware that the licensee was Warhol or that Warhol had created a total of fifteen derivative artworks entitled the Prince Series, which incorporated Goldsmith’s copyrighted photograph. 

Following Prince’s death in 2016, Vanity Fair’s parent company (Condé Nast) contacted the Andy Warhol Foundation for the Visual Arts, Inc. (AWF), who is the successor to Warhol’s copyright in the Prince Series, and requested permission to reuse the 1984 Vanity Fair image for a special edition magazine commemorating Prince. When Condé Nast learned about the additional Prince Series images, it sought, instead, to bypass Goldsmith and purchase a license from the ASF for use of the work entitled “Orange Price.” 

Once Goldstein learned of the existence of the Prince Series via the 2016 magazine cover, Goldsmith asserted her copyright concerns with the AWF, who subsequently sought a declaratory judgment from the court establishing that the Prince Series works were non-infringing or, in the alternative, made fair use of Goldsmith’s photograph. Goldsmith countersued for copyright infringement.

In analyzing as fair use defense, courts typically consider the following four factors:

• The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
• The nature of the copyrighted work;
• The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
• The effect of the use upon the potential market for or value of the copyrighted work.

Not all factors carry the same weight and, while courts do consider all of the factors in its analysis, the “transformative use” factor is crucial.  As the U.S. Supreme Court explained in Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994), a work is “transformative” if it “adds something new” by “altering [the source material] with new expression, meaning, or message.”  Importantly, the more significant the differences, the more likely the first factor weighs in favor of fair use.

With respect to the Prince Series, the trial court sided with the AWF and held that the AWF’s use constituted fair use.  However, the Second Circuit reversed, holding that the totality of all four of the fair use factors favored the photographer Goldsmith. The Supreme Court then granted certiorari and agreed to address the first factor in the fair use analysis.

The Supreme Court’s Important “Fair Use” Decision

The Supreme Court agreed with the Second Circuit, holding that the “purpose and character” of the AWF’s use of Goldsmith’s photograph (i.e., licensing to Condé Nast for commercial use) weighed against the AWF’s defense of fair use.  “Goldsmith’s original works, like those of other photographers, are entitled to copyright protection, even against famous artists,” Justice Maya Sotomayor wrote on behalf of the seven-member majority. She noted that “such protection includes the right to prepare derivative works that transform the original.”

“The use of a copyrighted work may nevertheless be fair if, among other things, the use has a purpose and character that is sufficiently distinct from the original,” Justice Sotomayor added.  “In this case, however, Goldsmith’s original photograph of Prince, and AWF’s copying use of that photograph in an image licensed to a special edition magazine devoted to Prince, share substantially the same purpose, and the use is of a commercial nature.”

In reaching its decision, the majority focused heavily on the commercial purpose and nature of the AWF’s use of Goldsmith’s work, rather than on Warhol’s artistic transformation.  The Supreme Court noted that the fair use doctrine does not protect the later “use of an original work to achieve a purpose that is the same as, or highly similar to, that of the original work.”

“[T]he first fair use factor considers whether the use of a copyrighted work has a further purpose or different character, which is a matter of degree, and the degree of difference must be balanced against the commercial nature of the use,” Justice Sotomayor explained. “If an original work and a secondary use share the same or highly similar purposes, and the secondary use is of a commercial nature, the first factor is likely to weigh against fair use, absent some other justification for copying.”

Justice Elena Kagan, along with Chief Justice John Roberts, dissented on their believe that the Court’s holding would have a chilling effect on artistic creation. “It will stifle creativity of every sort. It will impede new art and music and literature,” Justice Kagan wrote. “It will thwart the expression of new ideas and the attainment of new knowledge. It will make our world poorer.”

Implications for Copyright Law

The Supreme Court last considered fair use in 1994, when the Court held that rap group 2 Live Crew’s parody of singer Roy Orbison’s “Oh, Pretty Woman” constituted fair use. As a result, all eyes were on the Supreme Court’s decision in Andy Warhol Foundation v. Goldsmith.

The implications of the Court’s decision will be significant. 

As an initial matter, it is important to recognize that the Court focused on the AWF’s license to Condé Nast, rather than on Warhol’s creation of the Prince Series.  As such, the Court sidestepped the larger questions and issues regarding the extent to which Warhol’s artwork was transformative of Goldsmith’s photograph.

The Court’s opinion does suggest, however, thata new message or expression is, alone, may be insufficient to tip the “purpose and character of the use” factor in favor of fair use.  Rather, the decision suggests that courts must also consider the manner in which the secondary user exploits the original work. For example, when secondary use is commercial in nature, “compelling justifications” are required to justify fair use.

Justice Kagan’s opinion also emphasized the importance of copyright holders’ right to control derivative works, either by transforming their own work or being paid a license for use of the holder’s image.   “It will not impoverish our world to require [Warhol estate] to pay Goldsmith a fraction of the proceeds from its reuse of her copyrighted work,” Justice Kagan wrote. 

By rebalancing the fair use test, the Court’s decision will have widespread impact on the use of copyrighted images in software, literature, music, and film. The decision will also impact the growing wave of AI-generated art and literary works and the lawsuits that will follow.

Not surprisingly, entertainment industry groups representing songwriters and music publishers applauded the Court’s narrower interpretation of fair use. “Today’s Warhol Foundation decision is a massive victory for songwriters and music publishers,” said National Music Publishers Association President and CEO David Israelite. “This is an important win that prevents an expansion of the fair use defense based on claims of transformative use. It allows songwriters and music publishers to better protect their works from unauthorized uses, something which will continue to be challenged in unprecedented ways in the AI era.”

Key Takeaway

The full impact of the Supreme Court’s decision in Andy Warhol Foundation v. Goldsmith will become clearer over time.  Notwithstanding, courts conducting a fair use analysis in copyright infringement context will now focus their inquiry on whether the new work has a different purpose, including the extent to which the purpose is commercial in nature.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Albert J. Soler, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.