FALL 2009

Copyright Law

 
Course No. 9200 703 (and 803) 001 , Course IDs 79436, 79944
MW 4:45-6:15 p.m.
Room W-215
Professor Jay Dratler, Jr.
Room 231D (IP Alcove)
(330) 972-7972
jdratler@gmail.com
Copyright © 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009   Jay Dratler, Jr.   For permission, see CMI.
 

Video Pipeline, Inc. v. Buena Vista Home Entertainment, Inc.

342 F.3d 191, 67 U.S.P.Q.2d (BNA) 1705, Copy. L. Rep. (CCH) ¶ 28,668 (3d Cir. 2003)
Before: Becker * Nygaard, and Ambro, Circuit Judges

    * Judge Becker concluded his term as Chief Judge on May 4, 2003.
[*194]  Ambro, Circuit Judge:

In this copyright case we review the District Court's entry of a preliminary injunction against Video Pipeline, Inc.'s online display of "clip previews."  A "clip preview," as we use the term, is an approximately two-minute segment of a movie, copied without authorization from the film's copyright holder, and used in the same way as an authorized movie "trailer."  We reserve the term "trailer" for previews created by the copyright holder of a particular movie (or under the copyright holder's authority).

Video Pipeline challenges the injunction on the ground that its internet use of the clip previews is protected by the fair use doctrine . . . .  We reject [this] argument[] and affirm.

BACKGROUND

Video Pipeline compiles movie trailers onto videotape for home video retailers to [*195] display in their stores.  To obtain the right to distribute the trailers used in the compilations, Video Pipeline enters into agreements with various entertainment companies.  It entered into such an agreement, the Master Clip License Agreement ("License Agreement"), with Disney [the defendan'ts licensor] in 1988, and Disney thereafter provided Video Pipeline with over 500 trailers for its movies.

In 1997, Video Pipeline took its business to the web, where it operates VideoPipeline.net and VideoDetective.com.  The company maintains a database accessible from VideoPipeline.net, which contains movie trailers Video Pipeline has received throughout the years.  Video Pipeline's internet clients -- retail web sites selling home videos -- use VideoPipeline.net to display trailers to site visitors. The site visitors access trailers by clicking on a button labeled "preview" for a particular motion picture.  The requested trailer is then "streamed" for the visitor to view (because it is streamed the trailer cannot be downloaded to or stored on the visitor's computer).  The operators of the web sites from which the trailers are accessed -- Video Pipeline's internet clients -- pay a fee to have the trailers streamed based on the number of megabytes shown to site visitors. Video Pipeline has agreements to stream trailers with approximately 25 online retailers, including Yahoo!, Amazon, and Best Buy.

As noted, Video Pipeline also operates VideoDetective.com.  On this web site, visitors can search for movies by title, actor, scene, genre, etc.  When a search is entered, the site returns a list of movies and information about them, and allows the user to stream trailers from VideoPipeline.net.  In addition to displaying trailers, VideoDetective.com includes a "Shop Now" button to link the user to a web site selling the requested video.  Visitors to VideoDetective.com can also win prizes by playing "Can You Name that Movie?" after viewing a trailer on the site.

Video Pipeline included in its online database trailers it received under the License Agreement from Disney.  Because the License Agreement did not permit this use, Disney requested that Video Pipeline remove the trailers from the database.  It complied with that request.

On October 24, 2000, however, Video Pipeline filed a complaint in the District Court for the District of New Jersey seeking a declaratory judgment that its online use of the trailers did not violate federal copyright law.  Disney shortly thereafter terminated the License Agreement.

Video Pipeline decided to replace some of the trailers it had removed at Disney's request from its database.  In order to do so, it copied approximately two minutes from each of at least 62 Disney movies to create its own clip previews of the movies.  (Again, to distinguish between the previews created under the copyright holder's authority and those created by Video Pipeline, we call the former "trailers" and the latter "clip previews" or "clips."  We use the term "previews" generically.)

Video Pipeline stores the clip previews in its database and displays them on the internet in the same way it had displayed the Disney trailers.  In content, however, the clip previews differ from the trailers.  Each clip preview opens with a display of the Miramax or Disney trademark and the title of the movie, then shows one or two scenes from the first half of the movie, and closes with the title again.  Disney's trailers, in contrast, are designed to entice sales from a target market by using techniques such as voice-over, narration, editing, and additional music.  Video Pipeline's [*196] clip previews use none of these marketing techniques.

Disney also makes its trailers available online.  It displays them on its own web sites in order to attract and to keep users there (a concept called "stickiness") and then takes advantage of the users' presence to advertise and sell other products.  Disney has also entered into agreements to link its trailers with other businesses, and, for example, has such a link with the Apple Computer home page.

Video Pipeline amended its complaint to seek a declaratory judgment allowing it to use the clip previews.  Disney filed a counterclaim alleging copyright infringement.  The District Court entered a preliminary injunction, later revised, prohibiting Video Pipeline from displaying clip previews of Disney films on the internet. . . .

On August 7, 2003, the District Court entered summary judgment in Disney's favor . . . .

DISCUSSION
We review for an abuse of discretion the District Court's decision to grant Disney's request for a preliminary injunction. Adams v. Freedom Forge Corp., 204 F.3d 475, 484 (3d Cir. 2000). Under this standard, questions of law receive de novo review, and questions of fact are reviewed for clear error. Id.

To obtain a preliminary injunction, a party must show (1) that it is "reasonably likely to succeed on the merits" of its copyright infringement claim and (2) a likelihood that it will suffer irreparable harm if the injunction is denied. Id. Other issues to consider if relevant are (3) the likelihood of irreparable harm to the non-moving party and (4) the public interest. Id. Video Pipeline presents no arguments for issues (3) and (4), so we shall not discuss them, assuming instead that the District Court correctly held that these factors favored issuing the injunction. We therefore address the first two issues.

I.  Likelihood of Success on the Merits


* * *  To make out a prima facie case of copyright infringement for preliminary injunction purposes, Disney needed to show that the display of the clip previews likely violates any provision of § 106.  * * *

On appeal, Video Pipeline challenges the District Court's holding that the clip previews likely violate § 106(2), asserting that the clips cannot properly be classified as derivative works.  It does not contest the Court's determination as to subsections (4) and (5).  Because proof of a violation of any one subsection of § 106 states a case of illegal infringement, the District Court's decision that Disney made a prima facie showing of infringement on the basis of subsections (4) and (5) would not be affected by any conclusion we might make as to whether the clip previews are derivative in nature.  As Video Pipeline's display of excerpts taken from the copyrighted movies clearly comes within the prohibition on public display of motion pictures, and images from a motion picture, we turn to whether Video Pipeline's use should nonetheless be countenanced on the ground that it falls within the "fair use" doctrine.

A.  Fair Use

* * *
 [The court discusses Section 107 generally and recites the four statutory factors.] * * * [*198]  The four statutory factors "do not represent a score card that promises victory to the winner of the majority."  Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1110 (1990).  Rather, each factor is "to be explored, and the results weighed together, in light of the purposes of copyright."  Campbell, 510 U.S. at 578 (citations omitted).  Thus, as we apply copyright law, and the fair use doctrine in particular, we bear in mind its purpose to encourage "creative activity" for the public good. . . .

This focus on copyright's purpose makes relevant a comparison of the copy with the original: where the copier uses none of his own creative activity to transform the original work, holding the fair use doctrine inapplicable will not likely interfere with copyright's goal of encouraging creativity.  Thus, in the typical fair use case, the analysis under each statutory factor concentrates on the copy and the original work from which it derives.  In this case, however, our analysis of the four statutory factors will take into account where relevant Disney's original full-length films and its trailers.  We examine in this way the fairness of the online display of the clip previews because, among other things, the statute directs our attention under factor four to the effect of the allegedly infringing uses on both the potential market for any derivative works (the parties do not dispute that Disney's trailers qualify as derivative works) and the potential market for the originals. . . .

1.  Purpose and Character of the Use

. . . [T]he first factor requires that we consider "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes."  § 107(1).  The District Court concluded that the purpose and character of Video Pipeline's clip previews weigh against finding fair use.  We agree.

If a new work is used commercially rather than for a nonprofit purpose, its use will less likely qualify as fair.  Campbell, 510 U.S. at 585.  As Video Pipeline charges a fee to stream the clip previews, its use of the copies is commercial (as the District Court found).

The commercial nature of the use does not by itself, however, determine whether the purpose and character of the use weigh for or against finding fair use. . . .  We look as well to any differences in character and purpose between the new use and the original.  We consider whether the copy is "transformative" of the work it copied because it "altered the first with new expression, meaning, or message," or instead "whether the new work merely supersedes the objects of the original creation."  Id. at 579 (citations and alteration in original omitted).

Video Pipeline asserts that its use of the clip previews substantially transforms the full-length films from which they derive because the clips and the movies have different purposes.  According to Video Pipeline, the original works have an aesthetic and entertainment purpose while the clip previews serve only to provide information about the movies to internet users or as advertisements for the company's retail web site clients.(1)  To the extent [*199] that the character and purpose of the clip previews and the original full-length films diverge, however, the clips share the same character and purpose as Disney's derivative trailers.  Whatever informational or promotional character and purpose the trailers possess, so do the clip previews.  Consequently, the clips are likely to "supersede the objects of" Disney's derivatives.  Campbell, 510 U.S. at 579 (citations omitted).(2)  Although the clips are copied from Disney's original rather than its derivative works, it is highly relevant to our inquiry here that the clips will likely serve as substitutes for those derivatives.

Video Pipeline also urges us to take into account the functional character and purpose of the database in which it stores trailers and clip previews, apparently hoping we will discern no significant difference between its database and the internet search engine used in Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003).(3)  In Kelly, Arriba Soft Corp.'s search engine located images on other web sites in response to a user's request and displayed the results in thumbnail-size pictures, with a link that would take the user to the web site on which the image was found.  The Court held that the display of the thumbnail images was a fair use.

Video Pipeline's database does not, however, serve the same function as did Arriba Soft's search engine.  As used with retailers' web sites, VideoPipeline.net does not improve access to authorized previews located on other web sites.  Rather, it indexes and displays unauthorized copies of copyrighted works.  VideoDetective.com does permit viewers to link to legitimate retailers' web sites, but a link to a legitimate seller of authorized copies does not here, if it ever would, make prima facie infringement a fair use.

Finally, we note that Video Pipeline's clip previews -- to reiterate, approximately two-minute excerpts of full-length films with movie title and company trademark shown -- do not add significantly to Disney's original expression.  Video Pipeline itself asserts, and the District Court found, that the clip pre [*200] views "involved no new creative ingenuity."  The Court did recognize that deciding which scene or scenes to include in a clip preview requires some creative choice.   But as Video Pipeline disclaims the use of any creative ingenuity, we have no difficulty viewing those decisions as involving creativity only in a theoretical, and most narrow, sense. Hence, it is dubious what "new expression, meaning, or message" Video Pipeline has brought to its copies.  Campbell, 510 U.S. at 579.

It is useful to compare the clip previews with a movie review, which might also display two-minute segments copied from a film.  The movie reviewer does not simply display a scene from the movie under review but as well provides his or her own commentary and criticism.  In so doing, the critic may add to the copy sufficient "new expression, message, or meaning" to render the use fair.  Id. Here, in contrast, the fact that "a substantial portion," indeed almost all, "of the infringing work was copied verbatim from the copyrighted work" with no additional creative activity "reveals a dearth of transformative character or purpose."  Id. at 587.  Consequently, rejecting the fair use defense in this case will not likely "stifle the very creativity" that the Copyright Clause "is designed to foster."  Id. at 577.

With this context, the District Court correctly concluded that Video Pipeline's clip previews lack any significant transformative quality.  Thus, the commercial nature of the clip previews weighs more strongly against Video Pipeline's use.  Campbell, 510 U.S. at 580  (If "the alleged infringer merely uses [the original work] to get attention or to avoid the drudgery in working up something fresh, the claim to fairness in borrowing from another's work diminishes accordingly (if it does not vanish), and other factors, like the extent of its commerciality, loom larger.").  Given the shared character and purpose of the clip previews and the trailers (so that the clips will likely serve as a substitute for the trailers) and the absence of creative ingenuity in the creation of the clips, the first factor strongly weighs against fair use in this case.

2.  Nature of the Copyrighted Work

The second statutory fair use factor directs courts to consider "the nature of the copyrighted work."  § 107(2).  "This factor calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied."  Campbell, 510 U.S. at 586.  Fictional, creative works come closer to this core than do primarily factual works. Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 563 (1985).  The Disney movies at issue -- including, for example, Beauty and the Beast, Fantasia, Pretty Woman, and Dead Poet's Society -- are paradigms of creative, non-factual expression.  And Disney's trailers share imaginative aspects with the originals.

Video Pipeline argues that this factor nonetheless weighs in its favor because Disney released to the public its movies, if not all of its trailers, prior to Video Pipeline's display of the clip previews.(4)  It is true that Disney would have a stronger case against fair use had it not yet made its movies available for the public's viewing pleasure.  See id. at 554 ("The unpublished nature of a work is a key . . . factor tending to negate a defense [*201] of fair use.") (quoting S. Rep. No. 94-473 at 64 (1975)) (alteration and quotation marks in original omitted).

But the second statutory factor does not necessarily weigh in favor of finding fair use simply because the public already has access to the original work.  Rather, that Disney's movies and trailers contain mainly creative expression, not factual material, suggests that the use is not fair regardless of the published or unpublished status of the original.  See e.g., Campbell, 510 U.S. at 586 (holding that the song Pretty Woman fit "within the core of the copyright's protective purposes" because of its creative expression, without considering that the original had already been made available to the public).  The District Court therefore properly relied on the creative, non-factual expression involved in Disney's movies and trailers to hold that this factor weighs against the fair use defense.

3.  Amount and Substantiality of the Work Copied


The third factor requires an analysis of "the amount and substantiality of the portion used in relation to the copyrighted work as a whole."  § 107(3).  The District Court determined that this factor also weighed in Disney's favor.

As Video Pipeline points out, its previews excerpt only about two minutes from movies that last one and a half to two hours.  Quantitatively then, the portion taken is quite small.

But the third factor "calls for thought not only about the quantity of the materials used, but about their quality and importance, too."  Campbell, 510 U.S. at 587.  The District Court found that the clip previews, "for the most part, were used to provide the potential customer with some idea of the plot of each motion picture, its overall tone, and a glimpse of its leading characters."  Although the plot, tone, and leading characters are, of course, significant aspects of the films, the two-minute "glimpse" provided by the clips is made up only of scenes taken from the first half of the Disney films.  Disney has not claimed, for instance, that any of the clips "give away" the ending of a movie, or ruin other intended surprises for viewers of the full-length films.  Moreover, as advertisements, the clip previews are meant to whet the customer's appetite, not to sate it; accordingly, they are not designed to reveal the "heart" of the movies.  Simply put, we have no reason to believe that the two-minute clips manage in so brief a time, or even intend, to appropriate the "heart" of the movies.  Compare Harper & Row, 471 U.S. at 564-55 (weighing this factor against finding fair use because the alleged infringer "took what was essentially the heart of the book").

Because the clip previews copy a relatively small amount of the original full-length films and do not go to the "heart" of the movies, this factor, contrary to the District Court's determination, weighs in favor of finding fair Video Pipeline's display of its clips.

4.   Effect on Potential Market or Value

Finally, courts should evaluate "the effect of the use upon the potential market for or value of the copyrighted work."  § 107(4).  The District Court considered the question to be whether Video Pipeline's "use of the copyrighted work affects or materially impairs the marketability of the copyrighted motion pictures," and, finding the evidence equivocal, concluded that the fourth factor weighed neither for nor against finding a likelihood of fair use.

[*202]  As mentioned above, this final factor "must take [into] account not only . . . harm to the original but also . . . harm to the market for derivative works."  Campbell, 510 U.S. at 590.  Because the issues pertaining to the potential harm to the market for Disney's derivative trailers are more straightforward, we focus our analysis on this area and do not review the District Court's conclusion as to harm to the market for the original full-length films.  It is in this context that we conclude that the fourth factor weighs in Disney's favor.

Video Pipeline argued in the District Court that no market exists, or could exist, for movie previews because no one "ever paid or will ever pay any money merely to see trailers."  But in fact retail websites are paying Video Pipeline to display both trailers and clip previews.  Moreover, Video Pipeline takes too narrow a view of the harm contemplated by this fourth factor.  The statute directs us to consider "the effect of the use upon the . . . value of the copyrighted work," not only the effect upon the "market," however narrowly that term is defined.  § 107(4); see also Worldwide Church of God v. Philadelphia Church of God, Inc., 227 F.3d 1110, 1119 (9th Cir. 2000) (drawing such a distinction).  And the value "need not be limited to monetary rewards; compensation may take a variety of forms."  Id.; see also Sony Corp., 464 U.S. at 447 n.28 (stating in a different context that the "copyright law does not require a copyright owner to charge a fee for the use of his works, and . . . the owner of a copyright may well have economic or noneconomic reasons for permitting certain kinds of copying to occur without receiving direct compensation from the copier").

Disney introduced evidence that it has entered an agreement to cross-link its trailers with the Apple Computer home page and that it uses on its own websites "the draw of the availability of authentic trailers to advertise, cross-market and cross-sell other products, and to obtain valuable marketing information from visitors who chose [sic] to register at the site or make a purchase there."  [S]ee also Kelly, 336 F.3d at 821 ("Kelly's images are related to several potential markets.  One purpose of the photographs is to attract internet users to his web site, where he sells advertising space as well as books and travel packages.  In addition, Kelly could sell or license his photographs to other web sites or to a stock photo database, which then could offer the images to its customers.").  In light of Video Pipeline's commercial use of the clip previews and Disney's use of its trailers as described by the record evidence, we easily conclude that there is a sufficient market for, or other value in, movie previews such that the use of an infringing work could have a harmful effect cognizable under the fourth factor.

We have already determined that the clip previews lack transformative quality and that, though the clips are copies taken directly from the original full-length films rather than from the trailers, display of the clip previews would substitute for the derivative works.  As a result, the clips, if Video Pipeline continues to stream them over the internet, will "serve[] as a market replacement" for the trailers, "making it [*203] likely that cognizable market harm to the [derivatives] will occur."  Campbell, 510 U.S. at 591.  For instance, web sites wishing to show previews of Disney movies may choose to enter licensing agreements with Video Pipeline rather than Disney, as at least 25 have already done.  And internet users searching for previews of Disney films may be drawn by the clip previews to web sites other than Disney's, depriving Disney of the opportunity to advertise and sell other products to those users.(5)

Consequently, "'unrestricted and widespread conduct of the sort engaged in by [Video Pipeline] . . . would result in a substantially adverse impact on the potential market' for the [derivative works]."  Id. at 590 (quoting 3 M. Nimmer & D. Nimmer, Nimmer on Copyright § 13.05(A)(4) (1993)).  We therefore hold that the District Court should have weighed this factor against recognizing the fair use defense in this case.

* * * * *

Three of the four statutory factors indicate that Video Pipeline's internet display of the clip previews will not qualify as a fair use.  From our consideration of each of those factors, we cannot conclude that Video Pipeline's online display of its clip previews does anything but "infringe[] a work for personal profit."  Harper & Row, 471 U.S. at 563.  The District Court therefore correctly held that Video Pipeline has failed to show that it will likely prevail on its fair use defense.

* * *
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Footnotes

1.   [court's footnote 5]  We note that the clip previews do not constitute mere "information" about the movies, as would, for example, a list of the names of the actors starring in a film, or a statement of the rating it received.  Were Video Pipeline dealing only in this type of information, the fair use doctrine might not be implicated at all because copyright protection does not include facts and ideas, but only their expression.  See Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 547 (1985); 17 U.S.C. § 102(b).  Regardless, the clips are part of -- not information about -- Disney's expressive creations.  See id. at 569 ("Any copyright infringer may claim to benefit the public by increasing public access to the copyrighted work.").

Additionally, it is not clear to us that the use of a copy -- not accompanied by any creative expression on the part of the copier -- as an advertisement for the original would qualify as a type of use intended to be recognized by the fair use doctrine.  See Campbell, 510 U.S. at 578-79 ("The enquiry [under the first factor] may be guided by the examples given in the preamble to § 107, looking to whether the use is for criticism, or comment, or news reporting, and the like . . . ."); id. at 585 ("The use, for example, of a copyrighted work to advertise a product, even in a parody, will be entitled to less indulgence under the first factor of the fair use enquiry than the sale of a parody for its own sake, let alone one performed a single time by students in school.").

We need not resolve these issues, however, because (as we conclude in the text) the purpose and character of the use of the clip previews and that of Disney's derivative works -- its trailers -- are the same.

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2.   [court's footnote 6]  We see little significance in whether the trailers use marketing techniques that the clip previews do not.

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3.   [court's footnote 7]  A database is a discrete collection of data (here, previews) set up for efficient retrieval.  By comparison, a search engine refers to a system that locates data (or images, etc.) from other web sites; thus, a search engine will retrieve data that is not in the engine operator's control.  VideoPipeline.net is a database, not a search engine. 

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4.   [court's footnote 8]  The record does suggest that Video Pipeline streamed over the internet clip previews of some Disney movies not yet released to the public.

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5.   [court's footnote 10]  Record evidence indicates that clip previews were streamed over the internet more than 30,000 times between November 2000 and April 2001.

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