- D.Market Harm
The fourth fair use factor is tied closely together with the first factor analysis. It asks courts to examine “whether the copy brings to the marketplace a competing substitute for the original, or its derivative, so as to deprive the rights holder of significant revenues because of the likelihood that potential purchasers may opt to acquire the copy in preference to the original.”[1] The fourth factor analysis looks at “not only the … market harm caused by the particular actions of the alleged infringer,” but also the market harm that would result from “unrestricted and widespread conduct of the [same] sort.”[2]
In conducting the analysis, courts have looked at not only market effects for the particular work in the format used, but also at effects on the much broader set of potential licensing markets that may have been usurped by the use.[3] The scope of the relevant licensing markets is not unlimited, however. Courts have acknowledged that examining licensing markets introduces a degree of circularity; in theory the fact that a use was made at all indicates a potential licensing market that the rightsholder could have exploited. So, courts have limited the analysis to only licensing markets that are “traditional, reasonable, or likely to be developed.”[4]
Like the first factor analysis, the fourth factor is at its core tied back to the underlying purpose of the copyright system; when examining potential market substitution, the question is would the use “cause substantial economic harm such that allowing it would frustrate the purposes of copyright by materially impairing [the rightsholders’] incentive to publish the work?”[5]
For CDL, the primary reason why the market harm factor weighs in favor of the use is because the market effect of CDL is nearly identical to the market effect already favored under the first sale doctrine. For the works at issue, the controls that CDL requires ensure that the use closely matches the market effect that the rightsholder was already compensated for upon first sale of the book. A secondary consideration, but one that we feel is powerful and where the case for CDL is strongest, that at least for the 20th Century books which make up the bulk
- ↑ Authors Guild v. Google, Inc., 804 F.3d 202, 223 (2d Cir. 2015).
- ↑ Campbell, 510 U.S. at 590 (internal quotation marks and alteration omitted).
- ↑ Bill Graham Archives, 448 F.3d at 614.
- ↑ Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 930 (2d Cir. 1994) (“It is indisputable that, as a general matter, a copyright holder is entitled to demand a royalty for licensing others to use its copyrighted work, and that the impact on potential licensing revenues is a proper subject for consideration in assessing the fourth factor.”).
- ↑ Cambridge Univ. Press v. Patton, 769 F.3d 1232, 1276 (11th Cir. 2014).
