No fair or fair enough?  Equals Three v Jukin and the doctrine of fair use in the States

March 1, 2016 Published by

In late 2015, a Californian court was faced with the difficult task of assessing what is fair use in the context of the digital age.

Jukin Media, Inc. has built a substantial business out of licensing and distributing viral video clips to companies such as NBC, Fox, BBC and other distributors.   It has a team scouring the internet for videos likely to ‘go viral’, then enters licensing arrangements with the content creators.

Equals Three, LLC. produces short humour programs which it broadcasts via YouTube. The programs typically involve a host who gives an introduction, shows parts of video clips (usually in edited form) and remarks about the events and people presented in the clip viral videos.

Here’s an example of Equals Three’s work:

In some cases, Equals Three used Jukin clips in its programs, and Jukin sought payment for their use, equivalent to a licence fee.  When Equals Three did not pay, Jukin registered a takedown pursuant to the Digital Millennium Copyright Act (DMCA).  Equals Three then sued Jukin, claiming its use of the clips was protected under the fair use provisions of the US Copyright Act.  Jukin then counterclaimed, seeking summary judgement against Equals Three.

The US Copyright Act provides that use of a copyright work “for purposes such as criticism, comment, news reporting, teaching … scholarship, or research is not an infringement of copyright” and will be considered fair use.

A key question to determine is whether and to what extent the new work is ‘transformative’, in that it adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.  Relevantly, the US Supreme Court has stated that parody has ‘an obvious claim to transformative value’.

Equals Three asserted that its episodes were transformative because they were parodies of the

Jukin videos.

Acknowledging previous judicial statements that ‘(T)he fair use doctrine has been called the most troublesome in the whole law of copyright’, the Judge Wilson then examined the video clips in question.

In all but one case, he found that Equals Three’s episodes were ‘highly transformative’ and the commercial nature of the use was outweighed by the episode’s transformativeness.

Equals Three was clearly delighted with the result, calling it a ‘significant win’ for online video creators. ‘Whether you’re watching a ‘Let’s Play’ video by PewDiePie, a Pokemon sketch by Smosh, or a song parody by Bart Baker, fair use affects the entire online-video ecosystem,’ said a spokesman for the company.

However in January, Judge Wilson clarified that his ruling only meant that Jukin couldn’t prevail on its summary judgment motion and that the issue of whether the videos constitute fair use would go to trial.

That trial commences today and it will fall to 12 jurors to decide on the purpose and character of Equals Three’s programs, the nature of Jukin’s clips and the extent and nature of their use by Equals Three and the effect of that use in the market.

Jukin will claim that Equals Three wilfully infringed its clips and turned down licensing opportunities, but the trial will be not only about whether Equals Three’s use of viral videos is fair use, but also about Jukin’s actions in the lead up to its take down notice under the DMCA and its actions in relation to the alleged infringement before alerting YouTube.

We will keep you posted.

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