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17 U.S.C.S. § 107 provides that the fair use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. Congress provided four nonexclusive factors for courts to consider in making a fair use determination: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (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.S. § 107. Section 107 contemplates that the question of whether a given use of copyrighted material is fair requires a case-by-case analysis in which the statutory factors are not treated in isolation but are weighed together, in light of the purposes of copyright.
Plaintiffs brought the present copyright infringement action against defendant iParadigms LC, based on its use of essays and other papers written by plaintiffs for submission to their high school teachers through an online plagiarism detection service operated by iParadigms. iParadigms asserted counterclaims alleging that one of the plaintiffs gained unauthorized access to iParadigms' online service in violation of the Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030(a)(5)(A)(iii) & (B)(i), and the Virginia Computer Crimes Act, see Va. Code Ann. § 18.2-152.1-18.2-152.16. The district court granted summary judgment in favor of iParadigms on plaintiffs' copyright infringement claim based on the doctrine of fair use. On the counterclaims, the district court granted summary judgment against iParadigms based on its conclusion that iParadigms failed to produce evidence that it suffered any actual or economic damages. The parties cross-appealed.
The Court held that the defendant’s use of the plaintiffs’ work was fair use under 17 U.S.C.S. § 107 of the Copyright Act and the defendant was entitled to summary judgment on the copyright infringement claim. The archiving of the plaintiffs’ papers was transformative and favored a finding of fair use. The defendant’s use of these works was completely unrelated to expressive content and was instead aimed at detecting and discouraging plagiarism. The defendant’s use of the works in the case--as part of a digitized database from which to compare the similarity of typewritten characters used in other student works--was unrelated to any creative component. As to the defendant's counterclaims under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C.S. § 1030(a)(5)(A)(iii) & (B)(i), and the Virginia Computer Crimes Act (VCCA), Va. Code Ann. §§ 18.2-152.1-18.2-152.16, the district court based on its conclusion that the defendant failed to produce evidence that it suffered any actual or economic damages. The court held that the district court construed the economic damages provision too narrowly for the CFAA claim and the evidence of consequential damages presented by the company came within the any damages language of the VCCA.