The Internet has forced a re-examination of many legal doctrines that had largely seemed settled before the rise of the World Wide Web. Among those doctrines is the statute of “fair use” in the Copyright Act.

Judicial Trail

The principle of fair use is based on the belief that the public is entitled to freely use limited portions of copyrighted materials for purposes of commentary, and parody. Over the years, the doctrine has developed in the courts with judges working to balance the rights of copyright owners with the social need for certain reproduction in areas such as news reporting, criticism teaching, and research.

The fair use doctrine is part of the Copyright Act, which outlines four factors judges consider in resolving disputes:

  1. The purpose of the use and whether it is commercial or used for nonprofit educational purposes.
  2. The nature of the copyrighted work.
  3. The amount and substance of what is used in proportion to the whole copyrighted work.
  4. The effect on the potential market or value of the material.

With the rapid spread of the Internet, online companies have been using copyrighted material and claiming fair use, which allows people to use copyrighted material without consent for such purposes as scholarship, criticism and news reporting. But the use of copyrighted material on the Internet has come before the courts, which are further defining the limits on commercial claims of fair use.

Case Study: Video Pipeline

One case involved the New Jersey-based Video Pipeline, a firm that creates promotional videos for movies. Video retailers show them in their stores to help stimulate sales and rentals. When the market for Internet sales of home videos exploded, the company began to offer a service to online video retailers that allowed Web surfers to view, but not download, trailers of available films. Visitors to online video retailers could click on a link that took them to VideoPipeline.net, where the videos were streamed. This service was at issue in the lawsuit.

Walt Disney’s Buena Vista Home Entertainment unit sued Video Pipeline for copyright infringement and sought an injunction. Video Pipeline claimed that the ads were protected under the fair use doctrine. The court disagreed, ruling that Video Pipeline could not employ the defense because it was using the material for commercial purposes. More importantly, the court noted, while a portion of the films was seen in movie trailers, the small clips were being used to convey the essence or heart of the films and such use is not protected (Video Pipeline Inc. v. Buena Vista Home Entertainment).

According to the court ruling, movie trailers are an art form protected by copyright law and cannot be streamed on the Internet without permission. In handing down the ruling the judge cited that:

  • Using the material for commercial gain weighed against a fair use finding.
  • Video Pipeline’s actions detracted from Buena Vista’s market.
  • No new element was added to transform the original work, other than splicing scenes to fit a time frame.
  • Previews created by Video Pipeline consisted entirely of scenes from the copyrighted work.
  • The company was directly competing with Disney and Buena Vista in the market for supplying trailers to retailers.

The Lesson

When using copyrighted material, fair use can provide an important safe haven from copyright infringement actions. But simply using “a little” of someone else’s material is no guarantee that fair use is a viable defense. The limits of this defense must always be kept in mind.