7th Circuit doesn’t like transformativeness or factor 1, still finds fair use

Kienitz v. Sconnie Nation LLC, No. 13-3004 (7thCir. Sept. 15, 2014)
Just the facts:
While a student at the University of Wisconsin in 1969, Paul Soglin attended the first Mifflin Street Block Party, whose theme (according to Soglin) was “taking a sharp stick and poking it in the eye of authority.” Now in his seventh term as Mayor of Madison, Wisconsin, Soglin does not appreciate being on the pointy end. He wants to shut down the annual event. For the 2012 Block Party, Sconnie Nation made some tshirts and tank tops displaying an image of Soglin’s face and the phrase “Sorry for Partying.” The 54 sales, on which Sconnie Nation cleared a small profit, led to this suit, in which photographer Michael Kienitz accuses Sconnie Nation and its vendor of copyright infringement. Sconnie Nation concedes starting with a photograph that Kienitz took at Soglin’s inauguration in 2011. Soglin (with Kienitz’s permission) had posted it on the City’s website, from which Sconnie Nation downloaded a copy. The photograph was posterized, the background was removed, and Soglin’s face was turned lime green and surrounded by multicolored writing. Here are the original and the revision: A magistrate judge, serving by consent under 28 U.S.C. §636(c), granted summary judgment for the defendants, holding that Sconnie Nation had made fair use of the photo.
Kienitz’s photo and T-shirt graphic
The court of appeals affirmed, albeit narrowly.  It began with factor one, commenting that transformativeness doesn’t appear in the statute, though the Supreme Court “mentioned” it in Campbell.  (“Mentioned” is sort of like saying WMDs were “among” the reasons the US offered for war in Iraq.  But ok, set the tone.)  The court then expressed “skeptic[ism]” about the approach of Prince v. Cariou, “because asking exclusively whether something is ‘transformative’ not only replaces the list in §107 but also could override 17 U.S.C. §106(2), which protects derivative works.”  Instead, it’s better to stick with the statutory list, “of which the most important usually is the fourth (market effect).”  (Richard Primus refers to this kind of interpretive re-prioritizing of Supreme Court decisions by courts of appeals as “underruling.”)
I think it’s important to pause for a moment here, because we’re all used to the clever and extremely readable rhetoric of 7thCircuit opinions, but let’s not rush too fast past what this opinion is doing.  Having not quoted either the Supreme Court or the Second Circuit’s definition of transformativeness (which might allow one to assess whether there is too great an overlap with the derivative works right, or for that matter with the reproduction right since that’s what the majority of Second Circuit transformativeness findings deal with), the Seventh Circuit tells us to stick to the statute.  But it doesn’t tell us what the first factor does attempt to privilege and deprivilege. Instead, the court goes to its own economic lingo-driven test: “whether the contested use is a complement to the protected work (allowed) rather than a substitute for it (prohibited).”  Where this appears in the statute is left as an exercise for the reader, though by placement in the opinion we might possibly infer that it is the appropriate rephrasing of factor one, as opposed to inappropriate transformativeness (though the court later says that factor one isn’t relevant at all).  However, complement/substitute requires some baseline for understanding the appropriate scope of the copyright right—the markets to which copyright owners are entitled—just like transformativeness does.
Anyhow, t-shirts and tank tops don’t substitute for the original photographs.  (Do they serve as complements?  Judging by the analysis below, no.)  Kienitz didn’t argue that his plans for licensing the work for apparel were disrupted by defendants’ use or that demand for the original or any other use he contemplated was reduced.  
Other than market harm, only the amount taken mattered here:
Defendants removed so much of the original that, as with the Cheshire Cat, only the smile remains. Defendants started with a low resolution version posted on the City’s website, so much of the original’s detail never had a chance to reach the copy; the original’s background is gone; its colors and shading are gone; the expression in Soglin’s eyes can no longer be read; after the posterization (and reproduction by silkscreening), the effect of the lighting in the original is almost extinguished. What is left, besides a hint of Soglin’s smile, is the outline of his face, which can’t be copyrighted. Defendants could have achieved the same effect by starting with a snapshot taken on the street.
Factor one didn’t do much: the use was for-profit, but the choice of design was a “form of political commentary.” The nature of the work was likewise “unilluminating,” and then the court repeats its market harm conclusion, apparently now as a matter of the nature of the work: “Kienitz does not argue that defendants’ acts have reduced the value of this photograph, which he licensed to Soglin at no royalty and which is posted on a public website for viewing and downloading without cost.”
Kienitz had two points on his side:
First, defendants did not need to use the copyrighted work. They wanted to mock the Mayor, not to comment on Kienitz’s skills as a photographer or his artistry in producing this particular photograph. There’s no good reason why defendants should be allowed to appropriate someone else’s copyrighted efforts as the starting point in their lampoon, when so many noncopyrighted alternatives (including snapshots they could have taken themselves) were available.
Except: If the factor (3) analysis is correct, how is there any appropriation of the copyrighted work? Feistsays second-comers aren’t required to duplicate fact-gathering efforts, as a matter of constitutional law.  But never mind!  Fair use isn’t designed to protect the lazy, the court says.  Instead, it’s to facilitate uses that wouldn’t be possible if negotiation with copyright owners were always required, like parodies or academic uses.
Another point in Kienitz’s favor is that “this use may injure Kienitz’s longrange commercial opportunities, even though it does not reduce the value he derives from this particular picture. He promises his subjects that the photos will be licensed only for dignified uses. Fewer people will hire or cooperate with Kienitz if they think that the high quality of his work will make the photos more effective when used against them!”  (Judicial factfinding at its finest.  Even on its own terms this doesn’t make any sense, since the factor (3) analysis hangs on the extreme distortion of the crappy low-res version on the website, which could happen to any photo.)
But Kienitz didn’t make this argument that the Seventh Circuit just made up for him, and anyway that’s not enough to outweigh the fact that, “by the time defendants were done, almost none of the copyrighted work remained.” (Or, you know, the Campbell rule of law that demand suppression of this sort isn’t actionable, but that rule is both normative rather than efficiency-based and also comes from the Supreme Court and not the Seventh Circuit, so I guess it can safely be ignored.)  Affirmed.

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