Dorling Kindersley published “Grateful Dead: The Illustrated Trip.”  It had asked the Bill Graham Archives permission to reproduce seven posters promoting Dead concerts.  The parties couldn’t agree on a licensing fee and the book was published containing seven ‘thumbnail’ images of the posters.  The Archives sued.

The Southern District of NY conducted the traditional four part fair use test.  Defendant’s use was presumptively fair as it was biography.  The original work was a published creative work, favoring plaintiff.  The amount and substantiality (or lack thereof as this was a thumbnail, favored, defendant.

As to the fourth factor, “the effect of the use upon the potential market for, or value of, the copyrighted work,’ when reading the decision I was struck by the potential circularity of a finding that a use isn’t fair because it has a negative effect of the potential market.   As noted by the court, a plaintiff could create a business licensing parodies, and then argue that unlicensed parodies have a negative effect on that market.

I emailed noted copyright lawyer and deadhead Craig Mende, who responds:

“There has always been a danger of circularity in applying the fourth statutory factor.  As Judge Daniels notes, any uncompensated use of a copyrighted work involves the loss of “potential licensees,” and “if this were the determinitive factor, it would render the analysis for the fourth factor meaningless.”  To address this, the Court cited a line of cases holding that only potential licensing revenues for “traditional, reasonable or likely to be developed” markets should be considered, and imported a key first factor concept — whether the use is “transformative” — to make this determination:  “Whether a copyright holder is expected to exploit a market depends substantially on whether the use is transformative.”
I think it’s helpful that the Court is trying to give contours to what types of lost licensing opportunities count as harm under the fourth factor.  However, looking to whether the use is “transformative” may be the wrong inquiry, and probably proves too much.  For instance, turning a 60 page play into a 2 and a half hour feature movie is highly transformative, but that doesn’t mean that making a movie is a fair use of the play, or that it isn’t taking away from the copyright owner’s “traditional” market for the work.”

So the court found that ‘the transformative nature of the use is outside the ambit of lost licensing opportunities’ and this there was no negative effect on plaintiff’s market. Fair use.

Bill Graham Archives v. Dorling Kindersley, 03 CV 9307 (SDNY  May 11, 2005) (text of decision via Silicon Valley Media Law Blog).

Bill Graham Fillmore posters available here.