David Fagundes, the Irving D. and Florence Rosenberg Professor of Law at Southwestern and at the Donald E. Biederman Entertainment and Media Law Institute, shares a timely analysis on the applicability of the fair-use defense, factor four in particular, tackling concerns raised by online users who upload images and other content for various purposes to two websites of interest, Pinterest and Jigidi. Prof. Fagundes’ teaching and research interests span a range of property law issues, including copyright, real property and trademark. A productive writer of numerous legal publications, including books, study guides and articles, his work has been selected and presented at numerous national and international conferences. His full, thought-provoking article, cross-posted at PrawfsBlawg with permission, follows:

Pinterest, Jigidi and factor four of the fair use defense

One of the best things about being a law professor is that your students leave your classroom, and, if you’ve done your job right, see things in and about the world that they may not have before.  Recently, two of my copyright students wrote to call my attention to two sites that raise the same interesting emergent online copyright issue.

Pinterest describes itself as an “online pinboard” that allows users to “organize and share things you love.”  Pinterest users each have a space on the site (their “pinboard”) that allows them to re-post images they like from around the internet and organize them into categories (e.g., food, pets, etc.).  Jigidi enables users to post images in the form of online jigsaw puzzles that users can solve.  (N.B. I solved one and found it fun as hell.)  Of course, many other sites like Facebook enable possibly infringing reposting of images but the difference with Pinterest/Jigidi, I think, is that they function exclusively to enable re-posting of photos, so the infringement concern is central to their site’s main purpose.

Both sites are careful to admonish users to respect the copyrights of the photos they post.  And even if users post infringing content, both sites might be able to avoid secondary liability by taking advantage of the DMCA’s sec 512 safe harbor provisions.  Regardless, though, users who post copyright protected photos to either site without authorization would be liable for infringement, unless of course they could take advantage of copyright’s infamously slippery fair use defense.

There is already some writing around the blogosphere about possible fair use arguments with respect to these sites. In connection with Pinterest, at least, here is a very thoughtful and detailed post from a lawyer and Pinterest user named kirsten, who chose to take down her page on the site due to copyright concerns. Rather than recapitulating the entire fair use argument, I want to focus on how one particular element of the fair use defense — factor four — has played out in this dialogue.

This factor requires that courts considering fair use assess “the effect of the use upon the potential market for or value of the copyrighted work.”  Thinking about Pinterest and Jigidi in light of factor four raises interesting  issues not only about its application to those sites, but also about the meaning and function of that element of the fair use defense, in the digital world and beyond. I explore this issue below the fold.

First, factor four disfavors uses that harm the “potential market for or value of the copyrighted work.”  One suggestion about this factor in connection with Pinterest (that might also apply to Jigidi) is that because the photos appear as full-size reproductions (rather than, say, mere thumbnails), they’re market substitutes.  The flaw in this argument is that not all substitutes are market substitutes.  If a user pins a photo to her pinboard that doesn’t harm the market for the original unless somehow it leads to lost revenue for the owner.  In other words, merely causing someone to experience the photo outside the owner’s sphere of control doesn’t per se harm the owner’s market for that photo.

A plausible answer to this point is that re-postings like Pinterest enable photos to be pirated, eviscerating sales of the original.  True that this is a concern, but you gotta prove it.  Mere conjecture about theoretical market harm doesn’t do the trick under factor four.  The Second Circuit held as much in Texaco, when they emphasized that only harm to “traditional, reasonable, or likely to develop markets” counts.  Conjecture doesn’t.  This also answers a possible objection one might make in the Jigidi context.  Perhaps, one might say, Jigidi users have undermined the jigsaw puzzle market for owners of the rights in some of the featured photos.  This is possible, but depends on whether there actually is such a market (or whether one is reasonably likely to emerge).  The sort of theoretical market that economists are so good at imagining doesn’t do the trick.

This limit exists for a good reason:  If any conceivable or imaginable market harm caused factor four to weigh in favor of fair use, then users could never win on that factor.  Owners can always make the point that a fair user could have just sought a license, and that their failure to pay that license is a lost royalty that establishes market harm. And while that claim is always theoretically true, it often isn’t practically plausible.  If users had to negotiate a little royalty with each owner before posting their work on Pinterest or Jigidi, the transaction costs of the hassle would swamp the marginal benefit of re-posting the image at all.  And while it would be great to have an efficient online licensing clearinghouse enabling users to clear and pay cheaply for rights whenever they re-posted an image (sort of like the App Store), we don’t have that yet.

A second issue with both Pinterest and Jigidi is that one might imagine that factor four helps, rather than hurts, the case for fair use because by re-posting images on either site, users have created publicity for an owner’s work and provided a marginal lift (rather than a hit) to the owner’s economic well-being.  However plausible this claim, most courts have been skeptical of it.  Their take has been that owners, not users, should have the final say in determining what the highest and best use of a work should be.  Blogger kirsten makes a similar point in explaining her decision to take down her Pinterest page:

“What finally sealed the deal for me  as I tried desperately to talk myself out of deleting my gorgeous inspiration boards, was when I thought of some of the photographers whose work I had pinned from other websites.  Would they want me posting their images?  My initial response is probably the same as most of yours:  ‘Why not?  I’m giving them credit and it’s only creating more exposure for them and I LOVE when people pin my stuff!’  But then I realized, I was unilaterally making the decision FOR that other photographer.  And I thought back to the thread on Facebook where the photographers were complaining about clients posting photos without their consent and I realized this rationale is no different than what those clients argue:  ‘Why can’t I post them – it’s just more exposure for you.’  Bottom line is that it is not my decision to make.  Not legally and not ethically.”

I think kirsten made a thoughtful decision, and likely a rational one given the heavy liability associated with copyright infringement.  (Even a single act can lead to penalties of up to $150k, regardless of the economic harm you cause the owner.)  But two things about this rationale concern me.

First, the statute nowhere delegates exclusively to owners the decision to determine the highest and best use of a work.  It merely says that if a use harms “the potential market for or value of the copyrighted work,” it is less likely to be fair.  This is an objective test about the actual effect of a use on the value of a work.  It should make no difference what the subjective opinion of the owner is.  To hold otherwise, as so many courts have, is to confuse copyright (a suite of six and only six exclusive rights) with control.  Owners may not like that copyright does not extend them complete control over their works, but as a matter of law, it plainly does not.

Second, if pinning on Pinterest or making puzzles on Jigidi is fair use, then it is something users are free, indeed entitled, to do.  There is a very plausible argument that users enjoy such an entitlement in this case.  And given that, it seems concerning that users of these sites would stop making uses to which they may be fully entitled due to the fear engendered by the threat of infringement. This isn’t to fault their decision — on the contrary, it’s likely a rational one.  This is to fault copyright law for making it possible for owners to threaten innocuous uses like the ones on Pinterest and Jigidi with massive infringement judgments. This is a systematic problem rather than one local to the Pinterest/Jigidi issue, as Jim Gibson and many other writers have plausibly warned. Since owners will almost always have more resources than individual users, the threat of massive infringement liability affects the entire digital world, encroaching on space that Congress carved out in the interest of users to maintain a healthy public/private balance in our copyright law.

Cross-posted at Prawfs.com: