Robert J. Bernstein and Robert W. Clarida

On July 20, the Southern District of New York resolved a question that neither the Southern District nor the Second Circuit had ever squarely faced: Can the lawful owner of an art object create and post a photograph of that object in connection with the sale of the object through an online platform such as eBay, without the permission of the owner of copyright in the object? The sale of the object is clearly permitted under the first sale doctrine, codified at §109(a) of the Copyright Act, but by its terms §109(a) only creates an affirmative defense to the distribution of the physical object itself: “the owner of a particular copy … lawfully made under this title … is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.” The statute does not allow the making of a reproduction or a derivative work, such as a photo, or the display or distribution of such an image, and indeed courts (notably the Ninth Circuit) have sometimes found similar activities to be infringing.

In Stern v. Lavender, 16 Civ. 9886 (S.D.N.Y. July 20, 2018) (ECF 106), the Judge Paul A. Engelmayer largely denied cross-motions for summary judgment in a dispute involving a number of 1962 photographs of Marilyn Monroe, taken in Los Angeles by noted photographer Bert Stern at Monroe’s last photo shoot before her untimely death (the Stern photos). The defendants, long-time studio assistants of Stern, claim to have received legitimate copies of some of the Stern photos directly from Stern, and were recently sued for infringement by Stern’s widow when they created and posted their own images of the Stern photos in connection with offering the Stern photos for sale through eBay, Amazon and other digital platforms.

In a comprehensive decision, the court found that it could not resolve a number of factual disputes at the summary judgment stage, but did make two important findings that will narrow the scope of any future trial. First, the court found that Bert Stern had been the owner of copyright in the Stern photos, thus rejecting defendants’ argument that the Stern photos had been works made for hire. Accordingly, plaintiff had standing to bring a claim for infringement.  Second, the court found that if defendants had in fact been the lawful owners of legitimate copies of the Stern photos, as they claimed, and were thus entitled to sell those copies under §109(a), they could rely on the fair use doctrine, 17 U.S.C. §107, as a defense to creating and posting their own images of the photos in connection with selling the photos.

Fair Use

Section 107 of the U.S. Copyright Act provides that four non-exclusive factors shall be considered in determining fair use:

(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.

The Supreme Court in Campbell v. Acuff Rose Music, 510 U.S. 569 (1994), made clear that the four statutory factors must not be treated in isolation; rather, “[a]ll are to be explored, and the results weighed together, in light of the purposes of copyright.”

Campbell further characterized the “central purpose” of first factor analysis as follows: to see “whether the new work merely ‘supersede[s] the objects’ of the original creation, … or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is ‘transformative.’” Campbell also recognized that “transformative use” can significantly influence the inquiries into the third factor (whether the amount copied was reasonable in relation to the purpose and character of the use), the fourth factor (the more transformative the use, the less likely it is to substitute for the original), and in the overall inquiry:

Although such transformative use is not absolutely necessary for a finding of fair use, the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Such works thus lie at the heart of the fair use doctrine’ s guarantee of breathing space within the confines of copyright, … [T]he more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.

Campbell, 510 U.S. at 579.

Applying the above principles, and assuming arguendo that defendants were “lawful owners” of the Stern photos they offered for sale, Judge Engelmayer found defendants’ posting of images in connection with their online sales of the Stern photos to be fair use, following the “persuasive” reasoning of a 2015 case from the Central District of California, Rosen v. eBay, also involving sales on eBay. See No. CV 13-6801 MWF EX, 2015 WL 1600081, at *14 (C.D. Cal. Jan. 16, 2015).

Under §107(1), the court acknowledged that the display of images was commercial, but more significantly, the court also found that it was transformative “to provide information to legitimate purchasers under the first sale doctrine, not for the artistic purpose of [the creator’s] original images” (quoting Rosen). A “use of the copyrighted works [in this way] is not exploitative in the traditional sense,” but rather, “the purpose of the reproductions [is] completely different from the purpose of the originals, and so they [are] transformative.”

Turning to the second statutory factor, the nature of the copyrighted work, the Southern District found that it “weighs—slightly—against a finding of fair use” because the photos were published and were highly creative. Consistent with a large body of fair use case law, however, the court emphasized that this factor is not dispositive when the defendant’s use is transformative.  The third factor, the amount of the copying, was also held to provide “relatively limited guidance” because the amount taken was not disproportionate to the transformative purpose: “such copying does not necessarily weigh against fair use” where “copying the entirety of a work is … necessary to make a fair use of the image” (quoting Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 613 (2d Cir. 2006):

Here, there was good reason to display the entire work on eBay incident to the sales process, so as to fully inform potential buyers as to the item for sale … . A buyer cannot be expected to purchase a work of art having seen only a snippet of it.

Stern, slip op. at 43 (citations and internal quotations omitted).

The fourth factor, which looks to market harm, weighed strongly in favor of fair use because the court found the secondary use did not “usurp” the market for the Stern photos: “Put simply, a reasonable buyer of an original Stern photograph … would not be satisfied with a thumbnail image as contained on an Internet webpage. One product is a work of art, the other is a miniature reproduction used exclusively to facilitate the sale of the former.” Id. at 44.

The Southern District therefore granted summary judgment to defendants on fair use grounds, though it was careful to note that the issue was not resolved because it depended on a finding that the defendants were in fact lawful owners of the photographs they listed for sale on eBay, a finding the court could not make on the summary judgment record before it.

Conclusion

The Stern v. Lavender case is scheduled for a final pre-trial conference on November 8, with trial to begin shortly thereafter. If the defendants are found to have been “lawful owners” of the Stern photos they sold online, the court’s fair use ruling will stand; if not, it could prove cold comfort for the defendants, but a noteworthy development of the fair use doctrine for the rest of us nonetheless.

Robert W. Clarida is a partner at Reitler, Kailas & Rosenblatt and the author of the treatise Copyright Law Deskbook (BNA). Robert J. Bernstein practices law in The Law Office of Robert J. Bernstein.