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The fair use doctrine is a statutory exception to copyright infringement. Section 107 of the Copyright Act of 1976, 17 U.S.C.S. § 101 et seq., permits the unauthorized use or reproduction of copyrighted work if it is for purposes such as criticism, comment, news reporting, teaching, scholarship, or research. . Whether such fair use exists involves a case-by-case determination using four non-exclusive, statutorily provided factors in light of the purposes of copyright. The factors are (1) the purpose and character of the use; (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. The ultimate test of fair use is whether the copyright law's goal of promoting the progress of science and useful arts would be better served by allowing the use than by preventing it.
This appeal concerns the scope of copyright protection afforded artistic concert posters reproduced in reduced size in a biography of the musical group the Grateful Dead. Asserted copyright holder Bill Graham Archives, LLC ("BGA" or "Appellant") appeals from a judgment of the District Court for the Southern District of New York dismissing, on motion for summary judgment, its copyright infringement action against Dorling Kindersley Limited, Dorling KindersleyPublishing, Inc., and R.R. Donnelley & Sons Company (collectively "DK" or "Appellees"). On appeal, the court concluded that the fair use factors set forth in 17 U.S.C.S. § 107(1) to (4) weighed in favor of the publishers' use.
Is DK's reproduction of BGA's images protected by the fair use exception to copyright infringement?
As a general matter, a copyright holder is entitled to demand a royalty for licensing others to use its copyrighted work, and that the impact on potential licensing revenues is a proper subject for consideration in assessing the fourth factor.". We have noted, however, that "were a court automatically to conclude in every case that potential licensing revenues were impermissibly impaired simply because the secondary user did not pay a fee for the right to engage in the use, the fourth fair use factor would always favor the copyright holder."
Thus, the court holds that DK's use of BGA's images is transformatively different from their original expressive purpose. In a case such as this, a copyright holder cannot prevent others from entering fair use markets merely "by developing or licensing a market for parody, news reporting, educational or other transformativeuses of its own creative work.". "[C]opyright owners may not preempt exploitation of transformative markets . . . ." Id. Moreover, a publisher's willingness to pay license fees for reproduction of images does not establish that the publisher may not, in the alternative, make fair use of those images. Campbell, 510 U.S. at 585 n.18 (stating that "being denied permission to use [or pay license fees for] a work does not weigh against a finding of fair use"). Since DK's use of BGA's images falls within a transformative market, BGA does not suffer market harm due to the loss of license fees.