The fair use doctrine
The doctrine of fair use is one of the most important statutory limits in the US on the rights of copyright holders. This flexible doctrine permits the unlicensed use of copyright works in a broad range of circumstances, including for purposes such as criticism, comment, parody, news reporting, teaching, scholarship and research. In determining whether the use of copyright is 'fair', US courts consider the following four factors:
- the purpose and character of the use (including whether such use is of a commercial nature or for non-profit educational purposes);
- the nature of the copyrighted work;
- the amount and portion of the work used; and
- the effect of the use upon potential market for or value of the copyrighted work.
In addressing the first factor, AWF argued that Warhol's use of the original image was 'transformative', meaning that it had a further purpose or different character from the original work, as the prints conveyed a different meaning or message as compared with Goldsmith's original photo.
The US Supreme Court's decision and the 'problem of substitution'
The US Supreme Court, in a 7-2 decision, found in favour of Goldsmith. In so doing, it emphasised that the first factor of fair use relates to the 'problem of substitution', or whether a new work supersedes the objects of the original creation. The Court held that the first factor asks whether, and to what extent, the use at issue has a purpose or character different from that of the original. It found that, in the context of Condé Nast’s magazine cover commemorating Prince, the purpose of the 'Orange Prince' image was substantially the same as that of Goldsmith’s original photograph. The Court referred to the fact that both images are 'portraits of Prince used in magazines to illustrate stories about Prince' and that both uses were commercial in nature. Importantly, the Court observed that when a common purpose of the uses is commercial, the first factor is more likely to weigh against fair use without any other further compelling justification.
The Court also rejected AWF’s argument that Warhol’s series portrays Prince as a larger-than-life iconic figure, therefore conveying a meaning and message that is different from the more 'vulnerable' portrayal of Prince in Goldsmith’s original photo. It found that, regardless of any new impression or meaning that a viewer may ascribe to the work, or indeed that Warhol may have intended, the purpose of 'Orange Prince' was 'still, to illustrate a magazine about Prince with a portrait of Prince' and a 'somewhat different' portrayal was not enough to adequately establish the first fair use factor. The Court went further to distinguish the Prince portraits from Warhol’s infamous 'Soup Cans' series. The majority held that whereas the copyrighted Campbell’s logo was used to advertise soup, Warhol’s canvases used the copyrighted work for an artistic commentary on consumerism, which was a purpose 'orthogonal to advertising soup'. Conversely, in the Prince Decision, 'Orange Prince' was held to have no critical bearing on Goldsmith's photograph and AWF was found not to have offered any other compelling justification for the use challenged by Goldsmith.
Fair dealing in Australia
The doctrine of fair use does not apply in Australia. Rather, under the Copyright Act 1968 (Cth) (Copyright Act), Australian law provides a defined list of exceptions in which prescribed uses of material are deemed not to infringe copyright. More specifically, under the Copyright Act, a person does not infringe the copyright of another person if their use of the original material is a 'fair dealing' for the one of the following purposes:
- research or study;
- criticism or review;
- parody or satire;
- reporting the news;
- reproduction for professional advice or judicial proceedings; and
- enabling a person with a disability to access material.
The Copyright Act does not define the term 'fair dealing'. Indeed, the ‘research or study’ and ‘access by a person with a disability’ exceptions are also the only provisions that benefit from the guidance of legislated mandatory considerations to which a court must have regard when determining whether the dealing or use is fair. Whether a particular use is ‘fair’ in Australia will otherwise depend on the circumstances of each case.
Fair use versus fair dealing
In Australia, the fair dealing exceptions are exhaustive, meaning that fair dealing will only apply if the use falls within one of the purposes set out above. In this way, fair dealing is far more restrictive than the fair use doctrine in the US, which allows for greater flexibility when it comes to using copyright works. One of the major advantages of the flexibility and neutrality of the US fair use regime is that it is adaptable, which is significant in the context of an ever-changing technology landscape. By not having a prescribed list of categories, US Courts have been able to adapt to new developments faster than legislators, which arguably benefits copyright holders and consumers alike. A downside of open-endedness and flexibility, however, is the uncertainty that comes with it. There is an argument that a major benefit of Australian-style prescribed exceptions is that creators are able to more easily identify the circumstances in which they can legitimately use copyright material, therefore reducing the risk of infringement.
There has been much debate in Australia regarding copyright reform (especially in relation to whether 'fair dealing' exemptions should be retained or replaced by a regime equivalent to the 'fair use' exception). This includes:
- the 2014 the Australian Law Reform Commission Copyright and Digital Economy Report;
- the 2015 Productivity Commission Intellectual Property Arrangements Report; and
- the 2018 Department of Communications and the Arts Copyright Modernisation Consultation Paper.
Despite all of these reports, the Commonwealth Government is yet to enact any significant reforms to the fair dealing regime.
In the absence of reform synthesising the fair use and fair dealing regimes, it remains to be seen whether an Australian court is likely to come to a similar view for a case in Australia with circumstances analogous to the Prince Decision. Despite differences in the US and Australian regimes, however, and whilst not binding in Australia, the US Supreme Court's reasoning in relation to AWF's use of Orange Prince regarding criticism, commentary and parody may prove persuasive to an Australian Court should it ever come to consider a similar case in the context of those particular fair dealing exceptions.
Significance of the case and broader implications for AI
The Prince Decision is the first decision by the US Supreme Court in nearly 30 years relating to whether use of an artistic work constitutes fair use. Although the Court was careful to limit its consideration to the first fair use factor, the specific work in question, and the particular use of that work, the ruling has potentially far-reaching implications.
For US copyright law, it provides guidance in relation to 'transformativeness' in the fair use enquiry. In the context of copyright law in the US (and potentially Australia and elsewhere), the decision may have important implications following the rapid and unabated rise of generative AI tools. For example, the Prince Decision may be relevant in circumstances where an individual has used an AI system to generate ‘new’ content, and that AI system has been trained on materials that are subject to copyright. Depending on the particular circumstances, the Prince Decision illustrates that the mere fact that newly AI-generated content adds some new expression to an original work may not be sufficient to enable the user or vendor of an AI system to rely on the first fair use factor. This consideration will be of particular importance in circumstances where the generated content is used for a substantially similar commercial purpose to that of the original work.
The Prince Decision serves as a salient reminder for businesses to be aware of the risks of using materials without adequately considering intellectual property issues. In the absence of legislative reform directly addressing the use of AI in Australia, and with the recent increase in the use of generative AI tools and AI-generated content, this issue is likely to only increase in complexity. At a minimum, organisations should:
- provide careful guidance to their personnel as to appropriate use of these tools (whether in training datasets or generating content) by way of updated ‘acceptable use’ policies; and
- consider whether their use of AI tools is compliant with the information handling practices set out in their existing policies (in particular, data governance and privacy policies, and privacy collection notices and consents), and amend them as necessary.
For more information in relation to the rise of AI and issues related to copyright law in Australia, please see our article ChatGPT and the legalities of language generation.