By Jane C. Ginsburg, Professor of Law, Columbia University, USA
In May 2023, the United States Supreme Court handed down its much-anticipated decision on Andy Warhol Foundation (AWF) v. Goldsmith et al (the Warhol case) . The decision upheld the claim by the celebrity photographer, Lynn Goldsmith, that the Andy Warhol Foundation (AWF) had infringed her copyright in a photo of the late entertainer Prince, when, after Prince’s death in 2016, the Foundation licensed an illustration by Andy Warhol based on that photo, to Vanity Fair for a cover.
The case pitted claims to free artistic use of source works against the ability of the creators of those works (mainly photographers) to exploit markets for works based on their creations. The majority of the Justices focused on the prospects of the creator of the source work to make a living (“even against famous artists”), while the dissent trained on the genius of Andy Warhol, and a long tradition of artistic borrowing from prior works.
In 1981, Goldsmith created a portrait of Prince. In 1984, in a “one time, one use” agreement, Goldsmith licensed the photograph for USD 400 “to Vanity Fair magazine for use as an artist reference.” Vanity Fair commissioned Andy Warhol to create an illustration based on the photograph and published it together with an article about Prince in its November 1984 issue. On publication, Vanity Fair credited Goldsmith for the source photograph of Warhol’s illustration.
Warhol’s illustration was one of a series of 16 silkscreen paintings, prints and drawings he created based on Goldsmith’s photograph. He had not sold or otherwise exploited these works during his lifetime. The works form part of the late artist’s estate managed by the Andy Warhol Foundation (AWF).
After Prince died in 2016, Vanity Fair obtained a license from AWF to republish one of the Warhol illustrations (a different one from that published in its 1984 edition) on the cover of its special issue on the entertainer’s life. On this occasion, however, Vanity Fair did not obtain a license from Goldsmith, nor did the special issue credit Goldmith’s original photo. When Goldsmith learned of this unauthorized use of her work, she notified AWF that it had infringed the copyright in her original photo. In response, AWF sued her, claiming that its use of the photograph was a non-infringing fair use.
Fair use explained
The fair use exception to copyright protection allows the use of copyrighted works under certain conditions without the authorization of the copyright owner. Fair use excuses reasonable unauthorized appropriations from a first work, when the use to which the second author puts the appropriated material advances the public benefit in some way, without substantially impairing the present or potential economic value of the first work. It acts as a safety valve to ensure that rigid application of copyright law does not stifle the creativity copyright is designed to encourage.
The fair use exception […] acts as a safety valve to ensure that rigid application of copyright law does not stifle the creativity copyright is designed to encourage.
Fair use applies to all the exclusive rights under copyright, including the right at issue in the Warhol case: the right to make or authorize derivative works. This right gives the author (or successor in title) exclusive rights over “any . . . form in which the work may be recast, transformed or adapted.” Examples include adaptations, musical arrangements, editorial revisions, and alterations in form or media, such as using a photograph as the basis for a painting.
The US Copyright Act instructs courts assessing fair use claims to weigh four factors:
- The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.
- The nature of the copyrighted work.
- The amount and substantiality of the portion used in relation to the copyrighted work as a whole.
- The effect of the use upon the potential market for, or value of, the copyrighted work.
The Supreme Court’s 1994 decision in Campbell v. Acuff Rose, (Campbell) set the framework for US courts’ analysis of fair use claims. That case involved a derivative work, a commercial sound recording of a parodied version of the Roy Orbison song “Pretty Woman.” The Court determined that parody makes a “transformative use” of the song under the first factor. However, it sent the case back to the lower court for assessment under the third and fourth factors to determine whether the defendants’ work was a non-infringing parody or a “rap version” that competed with the plaintiff’s licensing of the song. Campbell characterized a “transformative use,” as one that “adds something new, with a further purpose, or different character, altering the first with new expression, meaning or message.” Following this decision, the case law in the lower federal courts concentrated on factor 1. For some lower courts, “new meaning or message” became a mantra whose invocation increasingly risked carving derivative works out of the scope of the original creator’s exclusive rights.
What the lower courts said in the Warhol case: the pathway to the Supreme Court
The district court upheld AWF’s fair use defense. It found the Warhol illustration transformative because “each Prince Series work is immediately recognizable as a ‘Warhol’ rather than as a photograph of Prince.” It also noted that Warhol’s illustration was unlikely to supplant the market for Goldsmith’s photograph. “It is plain that the markets for a Warhol and for a Goldsmith fine-art or other type of print are different.” The court also gave short shrift to Goldsmith’s contention that AWF’s unlicensed use competed with her ability to license her photograph: “this does not suggest that a magazine or record company would license a transformative Warhol work in lieu of a realistic Goldsmith photograph.”
The Second Circuit Court of Appeals reversed the district court’s decision. Addressing the first fair use factor, the Second Circuit chided the district court for applying a bright line rule “that any secondary work that adds a new aesthetic or new expression to its source material is necessarily transformative.”
The Second Circuit also observed that Warhol’s use was “commercial in nature, but . . . produce[d] an artistic value that serves the greater public interest. […] Nevertheless, just as we cannot hold that the Prince Series is transformative as a matter of law, neither can we conclude that Warhol and AWF are entitled to monetize it without paying Goldsmith the ‘customary price’ for the rights to her work […]..
The Second Circuit also found the remaining fair use factors favored Goldsmith. Her work was creative (factor 2); Warhol copied the identifiable essence of Goldsmith’s photograph without establishing a need to take Goldsmith’s representation (as opposed to any photographic representation) of the artist Prince (factor 3); AWF usurped the established market for licensing photographs as “artists’ references” for magazine publication (factor 4).
The Supreme Court agreed to hear an appeal, but only as to the first factor, which it examined from the perspective of AWF’s licensing of the work for publication in a magazine tribute to Prince. “On that narrow issue, and limited to the challenged use, the Court agrees with the Second Circuit: The first factor favors Goldsmith, not AWF.” The Court rejected AWF’s contention that “the Prince Series works are ‘transformative,’ and that the first factor therefore weighs in their favor, because the works convey a different meaning or message than the photograph.”
Instead, the Court made clear that creating a new work that adds a “new meaning or message” is not sufficient of itself to make a use “transformative.” The Court thus has restored the original meaning of “transformative use,” as a consideration to be weighed against other elements, notably the commercial character of the defendant’s use.
By emphasizing the purpose and character of the AWF’s use, the Court sidestepped examination of how the derivative work differed from the Goldsmith’s source photo. The Court thus avoided falling into the trap of addressing the artistic merits of Warhol’s work – an inquiry copyright courts are supposed to abjure. Rather, the Court focused on the extent to which the exploitation of AWF’s work was intended to substitute for one of the ways in which Goldsmith could exploit her work in primary and secondary markets, in other words, her ability to generate revenue from her work.
In shifting the focus of the first factor inquiry from the “transformativeness” of the defendant’s work to the distinctness of the use’s purpose or character, the majority acknowledged that “The same copying may be fair when used for one purpose but not another.” Thus, some uses not authorized by the plaintiff might be fair and others not, even though the uses involve the same work.
The decision underscores the need for caution when creating unauthorized derivative works for commercial use. As a result of the Court’s recognition that, depending on the facts, different exploitations of the same unauthorized derivative work may produce different fair use outcomes, it will be important in the future to anticipate what kinds of uses of the same work will and will not be fair.
The decision underscores the need for caution when creating unauthorized derivative works for commercial use.
For example, the decision indicates that fine art single or limited editions (as opposed to multiples, such as posters, as well as competing magazine publications, for which the plaintiff’s work might also be licensed) may still be fair use. The Supreme Court’s use-based analysis will likely insulate fine artists’ primary markets for exploitations of limited numbers of physical originals when the plaintiff’s primary and secondary markets all involve licensing of mass market multiples. In other words, the decision may deepen the differences between the “high end” of the art market, whose revenues derive mostly from the sale of physical originals, and the lower rungs of the market. On the other hand, because, under the court’s use-focused analysis, the artist-defendant’s work is not fair use, then even if gallery sales of physical originals might proceed free of the underlying artist’s copyright, the appropriating artist may not necessarily exploit her work in other markets, particularly for mass multiples, independently of the underlying artist’s rights.
The relevance of the Warhol case beyond visual arts
In Campbell, the Supreme Court ruled that an aesthetic transformation may not meet fair use requirements (factor 1) if it competes in a market for the source creator’s work (in that case, rap derivatives of popular songs). The existence of the “arrangement” privilege (see box) suggests that there are markets for many different versions of non-dramatic musical works with which an unauthorized (and uncompensated) version in a different style may compete.
The “arrangement” privilege under the US Copyright Act
The US Copyright Act provides a compulsory license, which includes the privilege of making a musical arrangement of the work to the extent necessary to enable it to conform to the style or manner of interpretation of the performance involved. However, the arrangement shall not change the basic melody or fundamental character of the work, and shall not be subject to protection as a derivative work under this title, except with the express consent of the copyright owner.
But because no composer, or other creator, may control markets for criticism of her work (such control would tend to suppress vigorous discussion of creative works), an arrangement or other adaptation that criticizes or mocks the source work will not be considered to substitute for a form of exploitation within the scope of the first author’s exclusive rights. To ascertain whether the defendant’s use is a non-substitutional commentary or critical use, or whether it is a competing derivative work, the Court reaffirmed Campbell’s distinction between parody and satire. Where the copied work is the object of the second work’s analysis, commentary (or mockery), it is necessary to copy as much as needed to support the commentary. By contrast, adhering to a distinction the CJEU has rejected, the Court emphasized that “[p]arody needs to mimic an original to make its point, and so has some claim to use the creation of its victim’s (or collective victims’) imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing.”
In the Warhol case, “because AWF’s commercial use of Goldsmith’s photograph to illustrate a magazine about Prince is so similar to the photograph’s typical use, a particularly compelling justification is needed. Yet AWF offers no independent justification, let alone a compelling one, for copying the photograph, other than to convey a new meaning or message. As explained, that alone is not enough for the first factor to favor fair use.”
The relevance of the Warhol case to AI
To close on a note of speculation: Does the Warhol case have any relevance to unlicensed inclusion of copyrighted works in the training data of artificial intelligence (AI) systems? Arguably, use of these works to enable AI systems to “learn” how to produce independent outputs consisting of literary, artistic, musical, audiovisual works or software, sufficiently repurposes the copying to count as “transformative” – at least if the outputs enabled by the inputs do not themselves infringe the source content (a point of considerable contention). But one should perhaps decouple the inputs from the outputs. Looking only at whether the copying of works into training data is a “transformative” fair use, the Warhol case suggests that analysis may depend on whether there is a market for licensing content for training data. Such markets do exist, notably in news media, for high quality, reliable data. In that event, even if the outputs might not infringe particular inputs commercial copying (at least) to create training data would be for the same purpose and might therefore fail a fair use first factor inquiry after the Warhol case.