Wade Clark Mulcahy LLP

In dueling rulings, Justice Sonya Sotomayor (for the 7 Justice majority) and Elena Kagan (for the dissent, J. Roberts, concurring) took on the issue that has vexed the art world: How to balance the rights of copyright holders versus the rights of artists to “appropriate” all or some part of the copyrighted work to create something new or different--without paying or even crediting the copyright holder.  <em>See</em>,<strong><em> <a href="https://www.wcmlaw.com/wp-content/uploads/2023/05/Andy-Warhol-Foundation-for-the-Visual-Arts-v.-Goldsmith.pdf">Andy Warhol Foundation for the Visual Arts v. Goldsmith</a>.  </em></strong>The majority gave Goldsmith the win.

Warhol took Lynne Goldsmith’s copyrighted photograph of rock icon Prince and, as with Marilyn Monroe and Liz Taylor, cropped the photograph, flattened the image, projected it onto a canvas, and then, using different color washes created a startling portrait of Prince--all without altering the moment Goldsmith captured on film.

Justice Sotomayor took pains to make clear that the majority decision turned solely on the licensing agreement between the Warhol Foundation and Condé Nast for the use of <strong><em>Orange Prince</em></strong> in a magazine article for which the Warhol Foundation got $10k and Goldsmith got zip. But Justice Kagan chose to read the majority’s rationale in broad and sweeping terms declaring that: “[The ruling will] stifle creativity of every sort. It will impede new art and music and literature. It will thwart the expression of new ideas and the attainment of new knowledge.  It will make our world poorer.”  Wow!

To be sure, the scope of this ruling will be debated for years to come.  And, no doubt, SCOTUS scholars, intrigued by the ordinance lobbed back and forth between the majority and dissent, will use this text as a case study in Supreme Court jurisprudence.  Yet, the question at hand is how much does this ruling really settle what is considered “fair use” of copyrighted works.  I suspect its applicability is quite narrow and merely affords copyright holders a thin slice of the pie when the artist licenses a creation for commercial purposes.  But the decision does not address, as the art world had hoped, what an artist may or may not do when a copyrighted work is the foundation for an imaginative creation.

In this brief note, I cannot do justice to the extraordinary and often acerbic dialogue between Justices Sotomayor and Kagan about how the balance ought to be struck between copyright holders and the creativity of an artist in using that work.  But I can outline the main points upon which Justice Sotomayor relied.

The Copyright Act, while protecting the rights of creators of original works, also provides a defense of “fair use.” Accordingly, the “fair use” of a copyrighted work for purposes such as criticism, comment, news reporting, teaching, scholarship, or research is not an infringement of copyright. 17 U.S.C. §107. To determine whether a particular use is “fair,” courts consider four factors as set forth in the fair use statute, namely:

“(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.”

Because the Warhol Foundation did not challenge that the second, third, and fourth factors favored Goldsmith, the Court analyzed only the first factor. Sotomayor noted that in considering “whether the use of a copyrighted work has a further purpose or different character, which is a matter of degree,” the “degree of difference must be balanced against the commercial nature of the use.”

After analyzing the various uses of the work at issue, Sotomayor concluded that the use of the photo by Condé Nast, as the cover of a commemorative edition magazine about Prince, served “substantially the same” purpose as the use of Goldsmith’s original photo of Prince, as “[b]oth are portraits of Prince used in magazines to illustrate stories about Prince.”

Sotomayor also found that the Warhol Foundation’s use was commercial in nature. Thus although a use’s transformativeness may outweigh its commercial character, because both elements here “point[ed] in the same direction,” Sotomayor concluded, they counseled against fair use absent some other justification for copying. Having found no persuasive justification, Sotomayor concluded that the first factor weighed in Goldsmith’s favor, and accordingly affirmed the Second Circuit’s decision.

In sum, despite the understandable worry expressed by Justice Kagan about the potential scope of the majority ruling, the decision is actually quite narrow.  My takeaway is this: If an artist licenses a derivative work for commercial purposes (such as a magazine cover or an advertisement, as examples), the copyright holder ought to be recognized and given a slice of the licensing fee.  The issue of what constitutes “fair use” in the world of appropriation art (and the sale of such art to collectors or museums) is a question left to another day.

My thanks to my colleague Erin Gallagher for assistance in preparation of this article.  If you have any questions regarding this decision, please call or email <a href="dwade@wcmlaw.com">Dennis Wade</a>.