Thursday, February 24, 2022

U.S. Court of Appeals for the Fifth Circuit, Bell v. Eagle Mountain Saginaw Independent School District, Docket No. 21-10504

Copyright Infringement

Tweets

Fair Use

Effect on Licensing

Tweets: A Fair Use of Copyright That Bars This Suit?

Attorney’s Fees in a Copyright Action

« Win One for the Gipper »

 

 

Appeal from the United States District Court for the Northern District of Texas USDC No. 4:20-CV-1157

 

Just as famous as some great upsets in sports history are the motivational speeches that inspired them. Knute Rockne, in a speech immortalized in film by a future President, asked his Notre Dame players at halftime to “win one for the Gipper.” They did just that, rallying to beat an undefeated Army. See Knute Rockne: All American (Warner Bros. 1940). Herb Brooks convinced a group of American college players that for one night they could be “the greatest hockey team in the world.” They were, defeating the mighty Soviets in the Miracle on Ice. See Miracle (Walt Disney Pictures 2004).

 

Technology now allows inspirational messages to be conveyed not only in the locker room but also on social media. The softball team and flag corps at a public high school outside Fort Worth used their Twitter accounts to post a motivational passage from sports psychologist Keith Bell’s book, Winning Isn’t Normal.

 

We do not know if the tweets motivated the students to perform at a higher level. We do know that the tweets resulted in Bell’s suing the school district for copyright infringement. We must decide if the tweets were a fair use of the copyright that bars this suit.

 

In 1982, Bell published Winning Isn’t Normal, a 72-page book that provides strategies for success in athletics. Bell continues to market and sell Winning Isn’t Normal through online retailers and his personal website, where he also offers merchandise, including t-shirts and posters that display the passage that was quoted in the tweets.

 

That passage, which Bell calls the WIN Passage, is separately copyrighted. Bell offers licenses for its use. The passage reads:

(…)

 

(…) The leading treatise on fair use observes that “increasingly, courts have considered fair use on a Rule 12(b)(6) motion to dismiss for failure to state a claim.” William F. Patry, PATRY ON FAIR USE § 7:5 & n.10 (2017) (citing more than 25 cases that have evaluated fair use at the Rule 12 stage).

 

(…) Our question, then, is whether a successful fair-use defense appears on the face of Bell’s complaint.

 

(…)

Congress codified the fair-use doctrine in the Copyright Act of 1976 and listed four factors that courts should consider when applying it:

(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. § 107.

 

The four factors are not exclusive. Harper & Row, 471 U.S. at 560. “All are to be explored, and the results weighed together, in light of the purposes of copyright.” Campbell, 510 U.S. at 578. A fair-use defense can succeed even if one or more factors favor the claimant. See id.Compaq Comput. Corp. v. Ergonome Inc., 387 F.3d 403, 409–10 (5th Cir. 2004). Courts typically give particular attention to factors one and four (the purpose and market effect of the use). See Monge v. Maya Mags., Inc., 688 F.3d 1164, 1171 (9th Cir. 2012); Barton Beebe, An Empirical Study of U.S. Copyright Fair Use Opinions, 1978–2005, 156 U. Pa. L. Rev. 549, 584 (2008) (finding that “the outcomes of factors one and four very strongly correlated with the test outcome” in a survey of caselaw). But, ultimately, courts have “almost complete discretion in determining whether any given factor is present in any particular case” and whether the totality favors fair use. See Melville B. Nimmer & David Nimmer, 4 Nimmer on Copyright § 13.05(A)(4) (Matthew Bender rev. ed. 2021).

 

The first factor considers “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” 17 U.S.C. §107(1). This involves a few considerations. The first and most obvious is commerciality—“whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.” See Harper & Row, 471 U.S. at 562. The second is whether the user acted in good faith. Google LLC v. Oracle Am., Inc., 141 S. Ct. 1183, 1204 (2021); NXIVM Corp. v. Ross Inst., 364 F.3d 471, 478 (2d Cir. 2004). The third is whether the use is “transformative,” meaning it “adds something new” to the copyrighted work. Google, 141 S. Ct. at 1203. The school district does not assert that its use was transformative but argues the other inquiries tip the first factor in its favor. We agree.

First, the school’s use was noncommercial(…)

(The school district did not, for example, charge others to access the WIN Passage, cf. Elvis Presley Enters. v. Passport Video, 349 F.3d 622, 628 (9th Cir. 2003), or pawn the work off as its own, Triangle Publ’ns, Inc. v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171, 1176 (5th Cir. 1980). Nor did it reproduce a substantial portion of Winning Isn’t Normal to save its students the cost of purchasing the book. Cf. Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 1110, 1118 (9th Cir. 2010). (Fn. 1)).

 

The school’s good faith adds another point to the scorecard. See Nunez v. Caribbean Int’l News Corp., 235 F.3d 18, 23 (1st Cir. 2000). Good faith does not excuse infringement. See id. Nevertheless, because “fair use presupposes good faith and fair dealing,” the propriety of the defendant’s conduct does factor into “the equitable balance of a fair use determination.” Fisher, 794 F.2d at 432 (quoting Harper & Row, 105 S. Ct. at 2232). The school posted the WIN Passage in quotes and credited Bell as the author. See Nunez, 235 F.3d at 23Bell discovered the posts soon after but waited nearly a year before telling the school he disapproved of them. Once he did, the school immediately removed the posts and responded that the incident was “a teachable moment” it would be sure not to repeat. We do not see anything in the school’s conduct “sufficiently blameworthy” to weigh against fair use. See id.

 

(…) The pleadings, however, also indicate that the WIN Passage was freely accessible before the softball team and flag corps posted it. The WIN Passage appears in images that Bell posts online. Indeed, the complaint suggests that Bell merely took issue with the post because it “was not the generally circulated version.” If an infringing use “enables a viewer to see such a work which he had been invited to witness in its entirety free of charge, the fact that the entire work is reproduced . . . does not have its ordinary effect of militating against a finding of fair use.” Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 449–50 (1984). The school quoted a small excerpt from Winning Isn’t Normal, which was already freely available to the public. As a result, the third factor is neutral.

 

The fourth factor examines “the effect of the use” on the market for and value of the copyrighted work. 17 U.S.C. § 107(4). We consider actual market harm but, more broadly, whether widespread use of the work in the same infringing fashion “would result in a substantially adverse impact on the potential market” for the original work and any derivatives. Campbell, 510 U.S. at 590; see also Compaq, 387 F.3d at 410. “This last factor is undoubtedly the single most important element of fair use.” Harper & Row, 471 U.S. at 566.

 

Bell does not allege that he actually lost any revenue due to the school’s use of the passage. Instead, his complaint contends that widespread use of the WIN Passage on social media could reduce “the incentive to purchase Winning Isn’t Normal or related merchandise.”

 

We do not see a plausible economic rationale to support Bell’s assertion that widespread tweeting of the WIN passage would undermine the value of his copyright. See Twombly, 550 U.S. at 566–68 (considering market realities in evaluating whether a claim is plausible). The tweets do not reproduce such a substantial portion of Winning Isn’t Normal “as to make available a significantly competing substitute” for the original work. See Author’s Guild, 804 F.3d at 223. If anything, the properly attributed quotation of a short passage from Winning Isn’t Normal might bolster interest in the book; it is free advertising. See Narell v. Freeman, 872 F.2d 907, 914 (9th Cir. 1989). The same is true for merchandise. An online post is not a market substitute for a coffee mug. Viral sharing of the WIN Passage on Twitter might enhance the notoriety and appeal of Bell’s work, thereby increasing the incentive to purchase products displaying it. The opposite inference does not make sense: How would online references to the WIN Passage reduce the market for merchandise displaying it?

 

(The school district asserts that Bell carries the burden on this factor because its use was not commercial. Although some courts once interpreted Sony as creating a presumption of de minimis harm for nonprofit uses, see e.g.Princeton Univ. Press v. Mich. Document Servs., Inc., 99 F.3d 1381, 1385–86 (6th Cir. 1996), the Supreme Court has since clarified that no such presumption exists, see Patry § 6:4 (“The burden of proving the defense always remains on the party asserting it.”); Campbell, 510 U.S. at 584–85; Harper & Row, 471 U.S. at 566–69. (Fn. 4).

 

Bell also alleges that the tweets might impact his ability to license similar uses of the WIN Passage. But we cannot recognize a “theoretical market for licensing the very use at bar.” Swatch Group Mgmt. Servs., Ltd. v. Bloomberg L.P., 756 F.3d 73, 91 (2d Cir. 2014) (quoting 4 NIMMER ON COPYRIGHT § 13.05(A)(4)). To weigh any possible effect on licensing, we must first find it plausible that there is a “traditional, reasonable, or likely to be developed market” for licensing the kind of use at issue. See Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 930 (2d Cir. 1994); see also Cambridge Univ. Press v. Patton, 769 F.3d 1232, 1276 (11th Cir. 2014) (finding that the availability of licenses for the plaintiff’s copyrighted work “is not determinative” of a potential market for licensing the defendant’s use). Bell says he offers licenses for the WIN Passage. Yet despite being embroiled in litigation for years, Bell is unable to allege that anyone has ever purchased a license before posting the WIN Passage on social media—much less a public school district, which has no commercial interest in its online presence. Even in his brief, Bell’s only authority that “such a market exists” is his own “filing of at least 26 copyright infringement lawsuits” and obtaining settlements “from at least 90 different alleged infringers.” Bell’s aggressive efforts to litigate, no matter how successful, are not indicative of a “traditional” or “reasonable” market for his work. See Hofheinz v. AMC Prods., Inc., 147 F. Supp. 2d 127, 141 (E.D.N.Y. 2001) (explaining alleged infringers “are likely to seek a license to avoid entering the murky realm of fair use law during the course of litigation”). Absent any plausible allegation that public schools would willingly pay to tweet the WIN Passage, Bell’s licensing concerns “are purely speculative.” See Narell, 872 F.2d at 914.

 

Bell has failed to plausibly allege a “substantially adverse impact” on a legitimate market for his copyrighted work. The fourth factor thus weighs in favor of fair use.

 

Time to tally up the scorecard. The first and fourth fair-use factors favor the school district, the second narrowly favors Bell, and the third is neutral. In both their number and importance, the statutory factors show that the school’s tweets were fair use. This conclusion comports with the “ultimate test of fair use”: whether copyright law’s goal of promoting creativity would be better served by allowing the use than preventing it. Castle Rock Ent., Inc. v. Carol Publ’g Grp., Inc., 150 F.3d 132, 141 (2d Cir. 1998).

 

Bell also challenges the district court’s award of attorney’s fees. We review this ruling only for abuse of discretion. See Hunn v. Dan Wilson Homes, Inc., 789 F.3d 573, 588 (5th Cir. 2015).

 

“Attorney’s fees to the prevailing party in a copyright action is the rule rather than the exception and should be awarded routinely.” Virgin Records Am., Inc. v. Thompson, 512 F.3d 724, 726 (5th Cir. 2008) (quotation omitted). Still, “recovery of attorney’s fees is not automatic.” Id. It is a matter of the district court’s discretion. Fogerty v. Fantasy, Inc., 510 U.S. 517, 533 (1994). Relevant factors include: “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Id. at 539 n.19 (quotation omitted).

 

The district court did not abuse its discretion by following the normal rule. Bell is not the typical copyright plaintiff seeking “a fair return for his creative labor.” See Twentieth Cent. Music Corp. v. Aiken, 422 U.S. 151, 156 (1975). He has a long history of suing public institutions and nonprofit organizations over de minimis uses of his work. Taking these cases into account, the district court reasonably concluded that Bell is a serial litigant, who makes exorbitant demands for damages in hopes of extracting disproportionate settlements. This case is another in the line. The school shared a single page of Bell’s work with fewer than 1,000 online followers and immediately removed the posts upon request. Bell was unable to identify any actual financial injury associated with that use but brought suit anyway. Attorney’s fees were thus an appropriate deterrent, both with respect to Bell and other copyright holders who might consider a similar business model of litigation. See id. at 618.

 

 

 

Secondary sources: William F. Patry, PATRY ON FAIR USE § 7:5 & n.10 (2017); Barton Beebe, An Empirical Study of U.S. Copyright Fair Use Opinions, 1978–2005, 156 U. Pa. L. Rev. 549, 584 (2008); Melville B. Nimmer & David Nimmer, 4 Nimmer on Copyright § 13.05(A)(4) (Matthew Bender rev. ed. 2021).

 

 

 

(U.S. Court of Appeals for the Fifth Circuit, Feb. 25, 2022, Bell v. Eagle Mountain Saginaw Independent School District, Docket No. 21-10504)

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