There’s no cushioning this blow: Comparative advertising is copyright fair use

Ashley Furniture Industries, Inc. v. American Signature,
Inc., 2014 WL 11320708, No. 11–cv–427 (S.D. Ohio June 25, 2014)
 
This 2014 case just showed up in my Westclip search and is
worth noting for adding to the small but consistent body of case law holding
that comparative advertising is a recognized category of copyright fair use.  Defendant Value City, a furniture seller that
competed with Ashley, ran various web and email ads, and used handouts/newspaper
inserts, comparing its products to those of Ashley by using Ashley’s own photos
of its furniture, taken from Ashley’s website, next to photos of Value City’s
furniture.  Value City it also used a
point of sale display containing a printout from Ashley’s website to tout the
comparative virtues of the furniture physically present in the Value City
stores.
Point of sale display with Ashley printout

Web/email ad with Ashley photo
In a deeply anticompetitive suit, Ashley sued for copyright
infringement (and unfair competition/trademark infringement, not addressed
here), arguing among other things that the price comparisons were
untrue/misleading; that the products weren’t truly comparable because of Ashley’s
higher quality; and that consumers were misled into thinking that Value City was
selling Ashley-made furniture, in part because the only brand name in the ads
was Ashley’s.  Initially, Ashley sued (without
copyright claims) in Chicago, but the judge expressed skepticism about the claims
and Ashley dismissed the Chicago suit without prejudice.  It then registered its copyrights in the
product photos used by Value City and sued again, first only for copyright
infringement, then re-adding the additional claims.
 
Ashley initially argued that Value City’s use couldn’t be
fair because its comparative ads were false and deceptive, making the purpose
and character of the use wrongful.  Dastar, however, cautions against
grafting Lanham Act principles into copyright law, creating a mutant.  Although courts have referred to deception
when addressing fair use in copyright cases, Sony Computer Entm’nt Am. v.
Bleem, 214 F.3d 1022, 1027 (9th Cir.2000); Triangle Publ’ns, Inc. v.
Knight–Ridder Newspapers, Inc., 626 F.2d 1171, 1176 n.13 (5th Cir.1980), “it
would be improper to materially alter the four-factor test by creating a
dispositive, threshold inquiry for falsity and deception.”
 
Factor one: courts have held that truthful comparative
advertising is in the public interest, even though it’s commercial.  The court here reasoned that “when
comparative advertising is truthful and not a passing off of the copyrighted
work, it serves the public interest and ameliorates the negative effect of
commercial use on a finding of fair use,” although Bleem and Triangle
treated this factor somewhat differently—Bleem
actually allowed the comparative nature of the advertising to favor a finding of fair use.  As for truthfulness: Value City didn’t
represent to consumers that the photos of Ashley’s furniture were Value City’s,
and even included Ashley’s trademarks with some photos, indicating that there
was no attempt to pass the photos off as having been created by Value City.
 
For purposes of a copyright claim, the only relevant passing
off would be of the copyrighted works.  “Very
simply, copyright law protects Ashley’s photographs, not Ashley’s interest in
selling the sofas depicted in the photos. As such, passing off in this context
would entail Value City’s sale of copies of Ashley’s photographs as its own,
which did not occur.”  Both Bleem and Triangle involved comparisons of copyrightable works that were the
underlying products, not separate, underlying products.  “Applying Lanham Act principles [relevant to
the underlying furniture] to evaluate Ashley’s copyright claim would run afoul
of the Supreme Court’s admonition against doing so in Dastar.” Thus, “allegations that Value City’s comparative
advertisements did not disclose differences in the quality of the furniture,
contained inaccuracies as to pricing, and led some consumers to believe that
Value City was selling Ashley sofas are actionable, if at all, under the Lanham
Act, not the Copyright Act.”
 
Thus, “the comparative nature of Value City’s
advertisements, which provided some benefit to consumers, reduces or negates
the impact of commercial use on the first statutory factor.”  Further, the use of Ashley’s photos as
components of comparative ads was transformative.  The comparative ads had a different purpose
than the original images: they contained an invitation to compare.  By contrast, if the defendant used only the
plaintiff’s images to claim that it could sell the underlying product, that
would be use “for precisely the same purpose as the plaintiff.”  This transformativeness made the first factor
neutral.
 
Factor two: the photos had both factual and creative
elements, weighing “modestly” against fair use. 
[This seems to contradict the relevance of transformativeness to other
factors, but oh well.]
 
Factor three: Ashley argued that Value City could’ve easily
created comparative ads without using Ashley’s photos at all.  However, the court agreed with Value City that
using the photos in their entirety was fair “because the photos were created to
depict Ashley’s furniture in the best possible light. Further, use of anything
less than the full images would not have given consumers a complete depiction
of the items of furniture for comparison.” 
Thus, factor three didn’t weigh against fair use.
 
Factor four: There was no market for these photos other than
Ashley itself. “Ashley sells furniture, not photographs of furniture.”  Though Ashley argued that the photos had
value for its independent dealers, it provided the photos to its dealers at no
cost, and any diminution in their value, or the value of Ashley’s furniture,
through the photos’ use in comparative advertising was not the kind of harm copyright
cares about.
 
If you’re following along, factor one is supposedly neutral,
two is slightly negative, three is neutral, and four “weighs substantially in
favor of a finding of fair use” because there’s just no market harm. “The
significance of the fourth factor cannot be overstated. The limited monopoly
copyright law grants to the creators of original works provides a concrete
incentive through access to the relevant market. It follows that if no market
or potential market exists for the original, then another’s use of the images
does not harm the copyright holder’s interests or inhibit the incentive to
produce original creative works.”
 

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