Supreme Court Offers New Guidance On Transformative ‘Fair Use’: Each Use Counts

Last week, the Supreme Court issued a highly anticipated decision providing guidance on the limits of copyright “fair use” that content creators and copyright holders should consider. In 2016, Andy Warhol Foundation for the Visual Arts, Inc. (“AWF”) licensed an orange silkscreen portrait of the musician Prince (“Orange Prince”) for use in a commemorative edition magazine Orange Prince is one of a series (“Prince Series”) that artist Andy Warhol created by altering a copy of Lynn Goldsmith’s copyrighted photograph. Newsweek commissioned Goldsmith to create the original photo in 1981. Newsweek published one of Goldsmith’s photos with an article about Prince. Goldsmith later licensed one Prince photo for use as an “artist reference for an illustration” for one time only. Warhol was hired to create the illustration, and Warhol used Goldsmith’s photo to create a purple silkscreen portrait of Prince: “Purple Prince.” Purple Prince appeared with an article about Prince in November 1984. When Prince died, AWF granted a license to publish Orange Prince in a commemorate issue.

Goldsmith sued AWF for copyright infringement. AWF argued that Warhol’s Prince Series was permitted “fair use.” The Copyright Act encourages the creation of new works of authorship by granting to the creator of an original work exclusive rights that include the rights to reproduce the copyrighted work and to prepare derivative works based upon that original work.¹ In furtherance of this underlying goal, however, copyright law balances incentives to create against the costs of restricting creativity. Accordingly, the doctrine of fair use provides that “use of a copyrighted work, . . . for purposes such as criticism, comment, news reporting, teaching . . . , scholarship, or research, is not an infringement of copyright.”²

To determine whether a particular use is a “fair use” the statute enumerates four factors to be considered: The purpose and character of the use, including whether such use is of a commercial nature or 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.³ The factors provide general principles to be applied by a court using judicial balancing, depending upon relevant circumstances. These factors are non-exclusive, and courts may therefore consider other factors to the extent helpful, but the four express factors must be considered in determining whether a particular use is fair, and therefore non-infringing. The Supreme Court’s recent decision in Andy Warhol Foundation for the Visual Arts, Inc., Petitioner v. Lynn Goldsmith, et al. focused solely on the first fair use factor; “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.”⁴

The first factor evaluates, among other things, “whether and to what extent” the use at issue has a purpose or character different from the original.⁵ The larger the difference, the more likely the first factor weighs in favor of fair use. A use that “alter[s] the first [work] with new expression, meaning, or message” is a “transformative” fair use.⁶ But given that the exclusive right to prepare derivative works covers the alteration of a pre-existing work by adding new expressive content, the degree and manner of transformation required to make “transformative” use must be different than that required to qualify as a derivative work, otherwise fair use would swallow up or negate the derivative work right. This conundrum is the issue addressed by the Supreme Court in Warhol.

Goldsmith sued AWF, alleging that Warhol’s Prince Series were infringing derivative works. AWF argued that Warhol’s Prince Series "add[ed] something new, with a further purpose or different character, altering the first with new expression, meaning or message", and was “transformative.” The district judge found that the Prince Series was a “transformative” fair use. The district court explained that Warhol transformed the image from a "vulnerable, uncomfortable person" into "an iconic, larger-than-life figure.” The Second Circuit overturned the ruling in March 2021, finding that the judge placed too much emphasis on subjective meaning. The Supreme Court was asked to decide whether the “purpose and character of the use” weighed in favor of AWF such that its commercial licensing would be considered fair use.

In a 7-2 opinion, taking great care to focus the fair use analysis on the specific use at issue in the case, the Supreme Court affirmed the Second Circuit’s ruling, finding that specific use had infringed. The Court explained that the first fair use factor considers the reasons for, and nature of, the copier’s use of an original work. The fact that a use is commercial, as opposed to nonprofit, is to be weighed against the degree to which the use has a further purpose or different character. If an original work and secondary use share the same or highly similar purposes, and the secondary use is commercial, the first fair use factor is likely to weigh against fair use, absent some other justification for copying. As noted above, the Court held that fair use requires an analysis of the specific “use” of a copyrighted work that is alleged to be an infringement. The same copying may be fair when used for one purpose but not another.

Here, Goldsmith’s copyrighted photograph had been used in multiple ways. The Court limited its analysis to the specific use alleged to be infringing—AWF’s commercial licensing of Orange Prince for use in a commemorative issue magazine—and “expressed no opinion as to the creation, display, or sale of the original Prince Series works.” In the context of the commemorative issue, the Court explained that the purpose of the Orange Prince image was substantially the same as that of Goldsmith’s original. Both were portraits of Prince used in magazines to illustrate stories about Prince. The uses were also commercial. Together, these two elements weighed against fair use.

AWF contended that by adding new expression to the photograph, Warhol made “transformative” fair use of it. The Supreme Court explained that the Supreme Court’s previous decision in Campbell cannot be read to mean that any use that adds new expression, meaning, or message is a “transformative” fair use. Otherwise, “transformative use” would eviscerate the copyright owner’s exclusive right to prepare derivative works, as many derivative works add new expression of some kind.

This decision has two important takeaways.

1. Content creators that base a secondary work on another’s copyrighted image must consider each use. The Court explained that fair use is evaluated in context of the specific use. A content creator may create an image that is “fair use” when used one way, while infringing when used in another.
2. Creating a secondary work that adds new expression, meaning, or message is unlikely to be a fair use, if it is used for a similar commercial purpose. If an original work and secondary use share the same or highly similar purposes, and the secondary use is commercial, the first factor is likely to weigh against fair use, absent some other justification for copying.

¹ 17 U. S. C. §106.

² Id.

³ Id.

⁴ §107(1).

⁵ Campbell v. Acuff-Rose Music, Inc., 510 U. S., at 579.

⁶ Id.