The Relevance of Bad Faith to Fair Use Analysis

Communications Lawyer, The Journal of Media, Information and Communications Law

Publication of the Forum on Communications Law American Bar Association (Volume 24, Number 2, Summer 2006)

Your client, Celebrity Weekly, obtains and unauthorized copy of a bombshell Lifestyle Magazine exclusive interview with Angelina Jolie. The editor want was to know whether they can publish highlights of the interview before the Lifestyle issue hits the stands. Lifestyle had refused to provide Celebrity Weekly with an advance copy of the interview but Celebrity Weekly managed to get it anyway. How does that play in the fair use analysis? Can Celebrity Weekly still claim a fair use defense even through they obtained the interview by unauthorized means?

Unfortunately, the case law is inconsistent and provides no clear answer to this question. The Supreme Court's decision in Harper & Row v. Nation Enterprises appears to inject the defendant's good or bad faith into its analysis of the fair use defense's first statutory factor (the purpose and character of the use).[i] The Court addressed the issue again nearly ten years later, suggesting in a footnote to its opinion in Campbell v. Acuff-Rose Music, Inc. that the bad faith subfactor should not be central of the fair use analysis. However, the Campbell opinion fails to shed any further light on the appropriate role of bad faith in the fair use inquiry.[ii]

Given the continued ambiguity, federal appellate courts have opted to give differing weight to a defendant's bad faith conduct. The Federal Circuit, at one end of the spectrum, has interpreted Harper & Row as requiring "an individual [to] possess an authorized copy of a literary work" as a prerequisite to claiming fair use.[iii] The Ninth and Second Circuits, on the other hand, both have read Harper & Row; as clarified by Campbell, more narrowly-ruling that the bad faith of a defendant is not depositive of a fair use defense but merely a subfactor that weighs in plaintiff's favor.[iv]

Four factors, pursuant to Section 107 of the Copyright Act, are relevant to determining whether a particular case is a fair use:

  1. the purpose and character of the use of the copyrighted work;
  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.[v]

Whether analysis of the first statutory factor, the purpose and character of the use, should include consideration of the propriety of a defendant's conduct can be a contentious issue in copyright infringement suits. Some argue that a defendant's bad faith conduct is central to the analysis of the first statutory factor. Others consider the defendant's conduct entirely irrelevant not just to the analysis of the first factor but also to the overall availability of a fair use defense.

The debate over the role of bad faith in a fair use analysis arose in the wake of the Supreme Court's decision in Harper & Row, which came about after an undisclosed source provided The Nation magazine with an unauthorized copy of President's Ford's soon to be published memoirs.[vi] Using excerpts from the manuscript, The Nation published a piece on why President Ford pardoned President Nixon-timing the piece to scoop an article scheduled to appear in Time Magazine. As a result of The Nation article, Time canceled its agreement to license prepublication excerpts from the purloined manuscript. Harper and Row, Ford's publisher, then brought a copyright action against The Nation. On appeal, the Second Circuit reversed the lower court's finding of infringement, holding that The Nation's act was a legitimate fair use of the copyrighted material.

The Supreme Court reversed, in a five-to-three opinion authored by Justice O'Connor. In evaluating the character and purpose under the first fair use factor, the Court noted that it could not ignore The Nation's stated purpose of scooping the forthcoming book and Time Magazine's excerpts. O'Connor wrote that "The Nation's use had not merely the incidental effect but the intended purpose of supplanting the copyright holder's commercially valuable right of first publication."[vii] "Also relevant to the ‘character' of the use," the Court continued, "is the propriety of the defendant's conduct."[viii] "Fair use presupposes good faith and fair dealing," the Court said, therefore finding The Nation's knowing exploitation of a purloined manuscript as weighing against The Nation (and a finding of fair use) on the first factor.[ix] The Court continued its analysis of the remaining fair use factors, ultimately concluding that The Nation's publication of verbatim excerpts from the unpublished manuscript was not a fair use.

Federal Circuit, Bad Faith and Fair Use Defense

Relying on this discussion in Harper & Row, the Federal Circuit in Atari Games Corp. v. Nintendo of America, Inc., ruled that as a broad proposition, bad faith by a defendant forecloses a fair use defense.[x] The court considered Atari's invocation of fair use in a claim arising out of Atari's reverse engineering of the Nintendo game system. The Federal Circuit held that the fair use defense was unavailable because Atari had obtained a copy of Nintendo's source code from the U.S. Copyright office by lying about its reason for needing the code. "To invoke the fair use exception," the Federal Circuit ruled, citing Harper & Row, "an individual must possess an authorized copy of a literary work."[xi] "Because Atari was not in authorized possession of the Copyright Office's copy of [Nintendo's source code], any copying [of that code]," the court held, "does not qualify as a fair use."[xii]

Supreme Court Revisits Relevance of Bad Faith

Two years after the Federal Circuit's decision in Atari, the Supreme Court briefly revisited the bad faith issue in Campbell, a parody case involving the song "Pretty Woman."[xiii] The defendants, the rap group 2 Live Crew, had sought permission to parody the classic Roy Orbison ballad. Despite being denied permission, the defendants parodied the song anyway. The copyright holder sued, and the Supreme Court held that 2 Live Crew's parody could be a fair use and remanded the case for factual findings. In a footnote to its discussion of the first fair use factor (the character and purpose of the use), the Court noted: "[R]egardless of the weight one might place on the alleged infringer's state of mind, we reject [plaintiff's] argument that 2 Live Crew's request for permission to use the original should be weighted against a finding of fair use."[xiv] "Even if good faith were central to fair use," the Court said, "...being denied permission to use a work does not weigh against a finding of fair use."[xv]

Ninth and Second Circuits Holding on Bad Faith

Following Campbell, some courts read the footnote as confirming that finding of good faith is not central to fair use and cannot therefore be dispositive.

Shortly after Campbell was decided the U.S. District Court for the Northern District of California refused to bar a defendant from claiming fair use, although it assumed he had obtained some of the works without authorization. In Religious Technology Center v. Netcom On-Line Communication Services, organization affiliated with the Church of scientology brought an infringement action against a former Scientologist who posted a large amount of the church's copyrighted work in an online forum dedicated to discussion of issues related to Scientology.[xvi] The court considered defendant's conduct in obtaining the copied works but ultimately determined that plaintiff's showing on bad faith was mixed.[xvii] It was more likely than not, the court found, that the defendant had received at least some of the copies in an improper manner.[xviii]

Nevertheless, the court ruled, the fact that the copies obtained were unauthorized did not preclude fair use. Although the court would weigh in plaintiff's favor when analyzing the first fair use factor, it held that bad faith should merely be considered in conjunction with the other factors. The Religious Technology court reasoned that "[n]othing in Harper & Row indicates that the defendant's bad faith was itself conclusive of the fair use question, or even of the first factor."[xix] After Campbell, the court held, "it is clear that a finding of bad faith, or a finding on any one of the four factors, cannot be considered dispositive." Accordingly, the court decided to "treat bad faith as merely one aspect of the first factor."[xx]

The Ninth Circuit endorsed this approach two years later in Los Angeles News Service v. KCAL-TV 9, a lawsuit involving the copyrighted video of the Reginald Denny beating.[xxi] The Los Angeles News Service (LANS) sued television station KCAL after the station used LAN's footage of the beating without a license. After LANS refused to grant KCAL a license, KCAL obtained a copy of the tape from another station.[xxii]

KCAL asserted a fair use defense and the Ninth Circuit, in analyzing the first fair use factor, assessed whether defendant's conduct was in bad faith.[xxiii] Citing Campbell, the Ninth Circuit ruled that the fact that KCAL had requested a license but had been refused one was relevant, but not dispositive of its fair use defense. As the court reasoned, "‘the propriety of the defendant's conduct' is relevant to the character of the use at least to the extent that it may knowingly have exploited a purloined work for free that could have been obtained for a fee."[xxiv] The court went on to consider all four factors, and then found that KCAL had not made a fair use of the videotape. Then Ninth Circuit thus signaled that a defendant's improper conduct, while relevant to the first fair use factor, would not foreclose a fair use defense.

The Second Circuit reached the same conclusion in NXIVM Corp. v. The Cult Education Institute, involving producers of business training seminars who brought an infringement action against individuals who posted NXIVM's copyrighted course materials on the Internet.[xxv] The defendants, who ran nonprofit websites providing information to the public about controversial groups, had obtained NXIVM'' course materials from a former participant in NXIVM's seminars.[xxvi] The former participant provided copyrighted information to the defendants despite having signed a nondisclosure agreement that precluded her from disseminating the materials to others. NXIVM moved for a preliminary injunction to require that their copyrighted information be removed from defendants' websites.[xxvii] The district court denied the preliminary injunction, finding no likelihood of success on the merits because defendant's fair use defense was likely to succeed.[xxviii]

On appeal, the Second Circuit concluded that the district court had not fully analyzed the impact of defendant's alleged misappropriation of the NXIVM course manuals in assessing fair use. However, following its own review of the relevant fair use factors, including the propriety of the defendant's conduct, the Second Circuit found that defendant's fair use defense still was likely to defeat plaintiff's infringement claim.

Turning to the first factor in the fair use analysis, the court recognized that the propriety of the defendant's conduct is "an integral part of the analysis under the first factor" that the district court had failed to consider.[xxix] "[T]o the extent [the defendants] knew [their] access to the manuscript was unauthorized or was derived from a violation of law or breach of duty, the consideration weights in favor of plaintiffs," the Second Circuit ruled.[xxx] Also relevant within this subfactor, the court found, was the fact that the defendants could have acquired the manuscripts legitimately by paying the requisite fees to enroll in NXIVM's seminars.[xxxi]

Assuming the defendants had engaged in bad faith, the court went to consider how much weight this subfactor should be afforded when assessing the first fair use factor.[xxxii] The Second Circuit rejected the broad interpretation of Harper & Row set out in the Federal Circuit's Atari opinion, noting that "the rule enunciated in Atari would foreclose the fair sue defense altogether based upon defendants' bad faith."[xxxiii] As the Second Circuit explained, "[b]ecause the Harper & Row Court did not end its analysis of the fair use defense after considering and ascertaining the defendant' bad faith there, we believe that the bad faith of a defendant is not dispositive of a fair use defense."[xxxiv]

Agreeing with the court in Religious Technology Center, the Second Circuit found that the Supreme Court's Campbell decision "further supports [the] conclusion that a finding of bad faith is not to be weighted very heavily within the first fair use factor and cannot be made central to fair use analysis."[xxxv] According to the Second Circuit in NXIVM, Campbell recognized "the continued relevance of Harper & Row, but clarified that the bad faith factor can be de-emphasized and will not be dispositive of the first fair use factor."[xxxvi] Given the continued ambiguity, however, the Second Circuit noted it would "await from the Supreme Court a clearer renunciation than the Campbell footnote of bad faith's relevance (however attenuated) to the fair use inquiry."[xxxvii]

Even with the bad faith subfactor weighting in plaintiff's favor, the court found the first factor still favored defendants in light of the transformative nature of the secondary use as criticism.[xxxviii] If no statutory factor could dispositive after Campbell, then neither could any single subfactor, the Second Circuit reasoned.[xxxix]

Should Bad Faith Even Be Considered?

Concurring with the majority decision in NXIVM, Judge Jacobs wrote separately to suggest that a finding of bad faith should not just be afforded little weight in the fair use analysis but rather no weight whatsoever. Jacobs asserted that Harper & Row's bad faith analysis was unnecessary to the outcome of the case. "Rejection of the fair use defense," wrote Judge Jacobs, "was compelled by the essential statutory considerations."[xl] The Supreme Court's consideration of fair use in Campbell, thus, "treated as an open question whether the secondary user's good or bad faith is pertinent to the fair use inquiry (contrary to its observation in Harper & Row)."[xli] As Judge Jacobs points out, "Campbell's contrary-to-fact phrasing-‘[e]ven if good faith were central to fair use'-rather suggests that it should not be."[xlii] Believing the issue as yet unresolved by the Supreme Court, Judge Jacobs offered his assessment "that a secondary user's good or bad faith in gaining access to the original copyrighted material ought to have no bearing on the availability of a fair use defense."[xliii] As Judge Jacobs went on to explain, the central objectives of copyright would be disserved if "the morality and good behavior of secondary users" formed part of the fair use analysis.[xliv]

Fair use, Judge Jacobs observed, is a statutory right, not a "privilege conferred on the well-intentioned."[xlv] Its purpose is to encourage the creation of original, transformative works. In considering the first fair use factor, two questions are critical: first, whether the secondary work copies the original with the same literary intention or rather with a new transformative purpose; and second, whether the secondary work usurps some of the market for the first by serving as an alternate means of acquiring the quoted material?[xlvi]

Bad faith, the concurrence noted, is not relevant to either of those inquiries. If a person obtains an original work improper means, that person likely will be subject to a host of civil and criminal charges. "[B]ut the question of fair use itself," Judge Jacobs concluded, "should be decided on the basis of the transformative character and commercial effects of the secondary use. If the use satisfied the criteria of 107, it is fair because it advances the utilitarian goals of copyright."[xlvii]

Just as fair play is not a defense to infringement, Jacobs contended that "bad faith should be no obstacle to fair use":

"Thus, a hotelier who stocks each room with photocopies of a newly copyrighted translation of the Bible is not saved from infringement by his piety; similarly, a movie reviewer who critiques-and reveals-a surprise ending is not deprived of the fair use by his malice or spite. Nor should a book critic be denied the fair use protection because she gained access to a prepublication manuscript by deceit. Fair use is not permitted infringement; it lies wholly outside the domain protected by the author's copyright."[xlviii]

If bad faith is factored into the fair use analysis, Judge Jacobs opined, it likely will lead "to the suppression of transformative works that are valuable to the expansion of public knowledge."[xlix] Given that bad faith is a slippery concept, publishers may be unwilling "to risk liability on the basis of (unknown or unsuspected) tactics and morals of authors who produce transformative works.[l] This, Judge Jacobs lamented would be a result contrary to the public good that copyright exists to promote.[li]

What Is Bad Faith?

As Judge Jacobs' concurrence in NXIVM warns, the notion of what constitutes bad faith is difficult to define. Factoring bad faith into the fair use analysis makes predicting the outcome of a fair use claim even more complicated. For example, if a secondary user obtains the original work by deceit, will that always constitute bad faith? In Atari Games Corp. Atari obtained Nintendo's source code by lying to the Copyright Office-clear evidence of bad faith, the Federal Circuit held.[lii] But what if the conduct is not egregious? What if the original work is obtained from an anonymous source? Must the recipient investigate whether its receipt of the work was authorized? And what about published a work after being denied permission? Does that alone constitute bad faith?

The decision in Religious Technology Center suggests that it may be the defendant's burden to establish that the original works were obtained properly. In that case, the court held that some of the works defendant copied were from books that were properly in his possession. But other works he copied were received over the Internet of anonymously through the mail.[liii] As to these, the court held, they were more likely unauthorized than not, given evidence that plaintiffs had kept the works confidential.[liv] Other courts may similarly infer that works obtained anonymously must be unauthorized absent proof to the contrary.

The Second Circuit opinion in NXIVM, however, suggests that a finding of bad faith presupposes that the defendant "knew that his access to the [copyrighted works] was unauthorized or was derived from a violation of law or breach of duty."[lv] Only then, the court held, would a defendant's conduct weigh against a finding of fair use.

Following NXIVM, for example a New York district court considered a copyright infringement claim brought by Eminem's record company arising from the unauthorized distribution by defendants of two songs that he composed.[lvi] The defendants claimed their distribution of the recordings constituted fair use insofar as they were exposing the alleged racism of a prominent entertainer.[lvii] In a motion for summary judgment Eminem countered that the defendants had acted in bad faith, having obtained the recordings after they had been stolen, a factor weighing against a finding of fair use.[lviii] But the court held that whether the recordings had been stolen rather than simply abandoned had not been established.[lix] And even if they had been stolen, the parties disputed whether defendants were aware of that fact, precluding any finding on summary judgment of defendants' bad faith.[lx]

Another factor courts have considered is whether copying a work, despite having been denied permission, is evidence of bad faith. The Supreme Court resolved this question in Campbell, finding that it does not constitute bad faith.[lxi] In Campbell, 2 Live Crew parodied the Roy Orbison song after having been denied permission to use the song. Campbell argued that the defendants' request for permission to use the original should be weighted against a finding of fair use.[lxii] The Court disagreed, finding that the defendants' "actions do not necessarily suggest that they believed their version was not fair use; the offer may simply have been made in a good-faith effort to avoid litigation."[lxiii] According to the Court, if the use is otherwise fair, then permission is unnecessary.[lxiv] Proceeding without permission does not therefore establish bad faith.[lxv]

In addition, several courts have found relevant whether the defendant knowingly exploited a work for free that could have been purchased for a fee. In Los Angeles News Service, for example, the court noted that the fact KCAL had requested a license but was refused one was not dispositive. But it nevertheless held the defendant's conduct improper given that the defendant had "obtained a copy of the tape from another station, directly copied the original, superimposed its logo on [plaintiff's] footage, and used it for the same purpose for which it would have been used had it been paid for."[lxvi] In NXIVM Corp., the Second Circuit similarly considered relevant the fact that the defendants could have paid the requisite fee to enroll in NXIVM's seminars and obtain their materials legitimately.[lxvii] But in that case, defendants would not have been using seminar materials for the same purpose which they would have paid for them. The court, in any event, assumed that defendants had engaged in bad faith conduct but nevertheless still found defendants' republication of the seminar materials to be a fair use.[lxviii]

A finding of bad faith also could be predicated on the violation of a contractual duty. In NXIVM Corp., the plaintiff required its seminar participants to sign a nondisclosure agreement. Violation of that agreement, the Second Circuit noted, "would be a breach of a contractual duty but would not ipso facto be a copyright infringement."[lxix] However, the court continued, "such a violation of a contractual duty, would be relevant in assessing the bad faith subfactor within the first factor.[lxx]

Advising Clients

Without further guidance from the Supreme Court on the relevance of bad faith to the fair use inquiry, advising clients on the viability of a fair use defense is difficult. Nevertheless, there are some lessons to be learned from those cases addressing the issue following Harper & Row and Campbell. Absent a clearer renunciation of the good faith principle, clients should be advised that their conduct in acquiring copyrighted materials likely will be considered at least as a subfactor within the first factor of a fair use analysis. Where clients receive the copyrighted material anonymously, courts may well assume that the client's possession of such material is unauthorized absent evidence to the contrary.

Where clients have obtained the copyrighted material through their own deceptive or unauthorized means, a finding of bad faith is more certain and likely to have a greater negative impact on a court's analysis of the first fair use factor. Following Campbell, clients need not feat that using copyrighted material after having been denied permission will automatically constitute bad faith conduct.[lxxi] But if the material could have been lawfully obtained by simply paying a fee, courts may well take that factor into account. Given the increasing competition among media outlets for market share and the premium associated with providing fresh and innovative content in an expedited manner in the Internet age, the question of defendants' bad faith conduct in using copyrighted material is likely to arise again and again in the context of fair use challenges.

If additional cases get litigated and the courts refine their analysis, the future may offer a greater understanding of precisely how a client's conduct will impact a claimed fair use defense. The trend appears to be heading toward giving less weight to a defendant's bad faith conduct. But it remains to be seen whether the well-reasoned view of Judge Jacobs-that such conduct should have no relevance at all-will prevail in the end.


[i] 471 U.S. 539 (1985).
[ii] 510 U.S. 569 (1994).
[iii] Atari Games Corp. v. Nintendo of Am. Inc., 975 F.2d 832, 843 (Fed. Cir. 1992).
[iv] See NXIVM Corp. v. Ross Inst., 364 F. 3d 471 (2d Cir. 2004); Los Angeles News Serv. V. KCAL-TV Channel 9, 108 F. 3 1119 (9th Cir. 1997); Religious tech. Cir. V. Netcom On-Line Commuc'n Servs., 923 F. Supp. 1231 (N.D. Cal. 1995).d
[v] 17 U.S.C. 107
[vi] 471 U.S. 539 (1985).
[vii] Id. at 562.
[viii] Id. at 562-63 (Internal citations omitted).
[ix] Id.
[x] Atari Games Corp. v. Nintendo of Am. Inc., 975 F. 2d 832 (Fed. Cir. 1992).
[xi] Id. at 843.
[xii] Id.
[xiii] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994).
[xiv] Id. at 585 n.18 (internal citations omitted).
[xv] Id.
[xvi] 923 F. Supp. 1231 (N.D. Cal. 1995).
[xvii] Id. at 1244-45.
[xviii] Id.
[xix] Id. at 1244 n. 14.
[xx] Id.
[xxi] Los Angeles News Serv. V. KCAL-TV Channel 9, 108 F. 3d 1119 (9th Cir. 1997).
[xxii] Id. at 1120
[xxiii] Id. at 1122
[xxiv] Id. (citing Harper & Row v. Nation Enter., 471 U.S. 539, 562 (1985); accord Narell v. Freeman, 872, F. 2d 907, 914 (9th Cir. 19890.
[xxv] NXIVM Corp. v. Ross Inst., 364 F 3d 471(2d Cir. 2004).
[xxvi] Id. at 475.
[xxvii] Id. at 476
[xxviii] Id.
[xxix] Id. at 478
[xxx] Id.
[xxxi] Id.
[xxxii] Id.
[xxxiii] Id.
[xxxiv] Id. at 479.
[xxxv] Id. at 479 n.2.
[xxxvi] Id.
[xxxvii] Id.
[xxxviii] Id. at 479.
[xxxix] Id.
[xl] Id. at 483.
[xli] Id.
[xlii] Id. at 484.
[xliii] Id. at 483.
[xliv] Id. at 483-84 (citing Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L.
[xlv] Id. at 485.
[xlvi] Id.
[xlvii] Id.
[xlviii] Id. at 486.
[xlix] Id.
[l] Id.
[li] Id.
[lii] Atari Games Corp. v. Nintendo of Am. Inc., 975 F. 2d 832, 843 (Fed. Cir. 1992).
[liii] Religious Tech Ctr. V. Netcom Online Commc'n Servs., 923 F. Supp. 1231, 1245 (N.D. Cal 1995).
[liv] Id.
[lv] NXIVM Corp. v. Ross Inst., 364 F.3d 471, 478 (2d Cir. 2004).
[lvi] Shady Records v. Source Enter., 2005 WL 14920 (S. D. N.Y. Jan. 3, 2005).
[lvii] Id at *17.
[lviii] Id. * 18.
[lix] Id.
[lx] Id.
[lxi] Campbell v. Acuff-Rose Music, Inc.,
[lxii] Id.
[lxiii] Id.
[lxiv] Id.
[lxv] Id. See, e.g. Bill Graham Archives v. Darling Kindersley Ltd. 2006 WL 123790, at *8 (2d Cir. May 9, 2006); Gulfstream Aerospace Corp. v. Camp Sys. Int'l. Inc., 2006 WL 106890, at *11 n.5 (S.D.Ga. Apr. 18, 2006)
[lxvi] Los Angeles News Serv. V. KCAL-TV Channel 9, 108 F.3d 1119, 1121 (9th Cir. 1997).
[lxvii] NXIVM Corp. v. Ross Inst., 364 F.3d 471, 478 (2d cir. 2004).
[lxviii] Id. at 482.
[lxix] Id. at 478 n.t.
[lxx] Id.
[lxxi] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, n. 18 (1994).

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