It's not okay just because it's free: three myths (and two truths) about fair use

[Note: this is part 4 of a 4-part series on fair use.]

The last portion of the fair use test, the effect on the original market for the work, is one of the most commonly-misunderstood elements of copyright law.

The test itself seems like it should be fairly straightforward but in fact it's not. The relevant text, "the effect of the use upon the potential market for or value of the copyrighted work", looks like it only addresses the specific use made in the specific context. But that's not what courts will actually look for: they will ask both whether the specific use that you're making of someone else's work is going to affect the potential market for or value of the work, but also what would happen if everyone started doing it.

That's right, judges are just like your mom.




This matters, and it shows the real difference between the US defense of fair use and the rest of the world's right of fair dealing. As the Acuff-Rose judgment points out, it's up to the person who wants to claim fair use to show that what they're doing should be legal. And that leads to the first of the 3 myths...

Myth #1: The original creator has to show why what you're doing is illegal. In fact it's the exact opposite in the USA: if you think what you're doing is fair use, you're the one who has to prove it. And if you can't do that, you're infringing.

As I've pointed out a few times, this matters. If you receive a takedown notice for your YouTube video, if you want to incorporate a character from another story in yours, if you take a couple of paragraphs from another book because you think the author said what you want to say in a better way than you could, then you had better be able to demonstrate that you should get to do this.

In fact, it's even worse. It's not just that you have to show that what you did should be okay. This is where your mom comes in: you need to show that if everyone did what you're doing it still wouldn't matter. That's a pretty tough hurdle and it's one most people forget. Don't make that mistake yourself.

Myth #2: It's okay so long as you don't charge money. Somehow people seem to have gotten it into their heads that if you do something but don't charge for it then it's "fair use". That's just flat-out wrong. The test isn't whether you made money from what you did, it's whether people like you might cost the original creator money by doing what you did. Really not the same thing at all.

Myth #3: You're just a little guy, how can you affect the market for a famous work? This is something that I've seen all over. You've made a Star Wars t-shirt and put it on CafePress and it sold 12 units: how could it possibly affect the market for Star Wars t-shirts at Walmart?

Unfortunately as I noted above that's not going to work because you're only considering half the issue. The other half goes back to your mom: what if everyone does it? Put another way: if everyone in the world started making Star Wars t-shirts, that would affect the market for Lucas to make money licensing the brand. So that means your Star Wars shirt isn't likely to be permitted if it would compete with the Lucas ones.

But what if it was something Lucas would never license in a million years? Say, slash fiction of Han and Leia having sex. (Trust me: it exists.) You might think that couldn't affect the market for legitimate Star Wars novels.

You'd be wrong.

Courts will look at the overall impact that a particular creation might have on the pre-existing IP, not just the specific situation. Some writers refer to this as a kind of "bad actor" test and although it's something like that I think they're missing the point a bit by limiting it that way because you don't have to be a bad actor to run afoul of this part of the test.

Let's stick with Star Wars. Imagine that Lucas never created any Star Wars novels. So by definition you're not blocking sales of their novels by writing novels of your own. Does that mean you should be allowed to do this? Quite possibly not: there's a very strong argument to be made that Lucas is allowed to decide that there will be no novels set in the Star Wars universe, and that your activities should be prohibited on that basis.

It may seem artificial to talk about a company that decides it doesn't want to make novels. Okay. How about sex toys? Most non-X-rated IPs don't want to be involved in that business. Should you be allowed to make your own Star Wars sex toys? You should expect that if you try, you'll find yourself in litigation. This will be the argument Lucas would use. And they would probably win.

And now the (little-known) truths:

Truth #1: Criticism and parody can usually get around this part of the test. It's true: if you're creating a review or a parody you're much more likely to be found to have engaged in fair use. To review a book you have to reference it pretty heavily. And if you give it a negative review you'll affect sales. Does that mean you shouldn't be allowed to do that? Obviously not.

So the fair use test recognizes that the mere fact that your work might have a negative impact on sales of the original work isn't by itself a reason to prevent you from doing it. What you should look for is whether what you're doing would possibly result in lost opportunities to create revenue by licensing derivative works. Not many creators would license anyone to create a parody.

Truth #2: Not everyone feels the same way about these issues. Different companies and IP owners have different attitudes toward people using their properties to make their own creations. And if you've got an IP owner who permits you to make your own creations then they have decided by definition that they will allow your work and so it doesn't matter what effect it has on the market.

Video game companies tend to be particularly permissive in this regard. Developers like Epic (Unreal Tournament) and Bethesda (Elder Scrolls) will distribute all of the tools necessary for you to create your own game levels and other in-game creations to modify their properties. Microsoft has gone so far as to create its own Game Content Usage Rules which allow very broad use of their properties to create downstream creations (full disclosure: when I was the lawyer for Microsoft Game Studios I wrote these).


With that, I'm done with the academic discussion of fair use. I'm sure it will come up repeatedly over the next few months as we go through various topics, but it seemed like a good idea to get the general principles set forth. Was it useful? Do people want to see more of these general info posts? Or should I be working it into more topical ones (which risks never discussing certain things if they don't come up for a while)?


LINKS:
Legal Minimum post on fan fiction:
http://legalminimum.blogspot.com/2012/08/want-to-make-million-dollars-from-fan.html
Campbell v. Acuff-Rose Music:
http://scholar.google.com/scholar_case?q=acuff-rose&hl=en&as_sdt=2,48&case=16686162998040575773&scilh=0
Microsoft Game Content Usage Rules:
http://www.xbox.com/pt-BR/Community/Developer/Rules