Case 1:16-cv-07634-JMF Document 55 Filed 11/02/17 Page 1 of 28
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`16-CV-7634 (JMF)
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`OPINION AND ORDER
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`-v-
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`BARCROFT MEDIA, LTD. et al.,
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` Plaintiffs,
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`COED MEDIA GROUP, LLC,
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` Defendant.
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`---------------------------------------------------------------------- X
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`JESSE M. FURMAN, United States District Judge:
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`Plaintiffs in this case — Barcroft Media, Ltd. (“Barcroft”) and FameFlynet, Inc.
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`(“FameFlynet”) — are the purveyors of entertainment-related photojournalism and owners of
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`certain copyrighted celebrity and human interest photographs. Defendant Coed Media Group,
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`LLC (“CMG”), which runs celebrity gossip and entertainment websites, displayed several of
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`Plaintiffs’ photographs (the “Images”) on its websites without paying licensing fees or otherwise
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`getting authorization. Plaintiffs now sue for copyright infringement. CMG concedes that
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`Plaintiffs own the copyrights to the Images and that it used the Images without prior permission.
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`Nevertheless, it contends that Plaintiffs waived most of their infringement claims and that, in any
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`event, CMG’s display of the Images was fair use.
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`Last month, the Court held a one-day bench trial on Plaintiffs’ claims and CMG’s
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`defenses. In this Opinion and Order, the Court provides its findings of fact and conclusions of
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`law. Ultimately, for the reasons set forth below, the Court finds that CMG’s waiver and fair use
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`defenses fall short, entitling Plaintiffs to injunctive relief and actual and statutory damages
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`derived from the reasonable licensing fee CMG would have paid to use the Images.
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`11/02/2017
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`BACKGROUND
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`Based on the evidence and testimony presented at trial, the Court makes the following
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`findings of fact by way of background. The Court includes additional factual findings in the
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`context of the legal analysis below.
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`Plaintiffs provide entertainment-related photojournalism and own the copyrights for
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`various paparazzi photographs and videos of celebrities and “other persons of interest.” (PTX 46
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`(“Taylor Aff.”) ¶¶ 8, 94). They acquire this content from photographers with whom they have
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`ongoing relationships, in the form of employment agreements, assignment agreements, and
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`work-for-hire agreements, (Taylor Aff. ¶¶ 9-10, 95), and Plaintiffs register new images received
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`from their photographers with the U.S. Copyright Office, (Taylor Aff. ¶¶ 15, 102). Barcroft and
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`FameFlynet employ the same copyright tracking service to register their copyrights; monitor
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`digital uses of their photographs; identify such uses as potential infringements; and collect
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`documentation, including screenshots, of potential infringements. (Taylor Aff. ¶¶ 2-7, 93).
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`At issue in this case are twelve images (or sets of images) owned by Plaintiffs and
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`registered with the Copyright Office — namely, the Images.1 The Images depict actress Salma
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`Hayek (the “Hayek Image”), actress Amanda Bynes (the “Bynes Images”), singer Selena Gomez
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`(the “Gomez Image”), actress Zooey Deschanel (the “Deschanel Image”), and actress Lea
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`Michele (the “Michele Image”). The Images also include a depiction of a man waving a Union
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`Jack in a matching hat and jacket while waiting outside the hospital for the birth of Prince
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`William and Kate Middleton’s child (the “Loughrey Image”); and photographs depicting a
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`1
`Plaintiffs’ Amended Complaint lists eighteen Images as in dispute. (See Docket No. 14,
`Ex. 1). The parties stipulated to dismissal of Plaintiffs’ claims relating to three of the
`photographs. (See Docket No. 28). Plaintiffs admitted that Images 1 and 9 are the same work, as
`are Images 2, 6, and 8. (See DTX 15, at 6).
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`mother and daughter, the former of whom underwent plastic surgery to resemble the latter (the
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`“Horrocks Images”). It is undisputed that Plaintiffs own all of the Images; that Plaintiffs
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`registered each Image with the Copyright Office; that CMG displayed the Images in whole or in
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`part on its websites; and that CMG did not have Plaintiffs’ prior authorization to do so. (See
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`Docket No. 46 (“Def. Opp’n”), at 7 (describing various “issues that are not even disputed”); see
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`also Docket No. 36 (“JPTO”), at 7-12).2
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`CMG runs several small popular culture, sports, and entertainment websites, which
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`collectively receive roughly four million unique users per month. (JPTO 6-7; DTX 21 (“Coakley
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`Aff.”) ¶ 12). CMG has lost money every year since its inception, with the exception of 2012.
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`(Coakley Aff. ¶ 15). In light of its business model and precarious financial situation, CMG does
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`not license individual images for display on its websites; instead, it predominantly uses image
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`subscription services to populate its websites with photographs. (Coakley Aff. ¶¶ 17-20).
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`Indeed, the Chief Executive Officer of CMG testified that the company “would never pay a
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`substantial fee to license any image for its Websites, which earn little revenue and have
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`consistently been in the red.” (Coakley Aff. ¶ 21). CMG’s websites earn money by selling
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`advertising space through online marketplaces. (JPTO 7; Coakley Aff. ¶ 24). CMG takes in
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`approximately $1.50 per thousand visitors to one of its webpages. (Coakley Aff. ¶ 25).
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`Between 2014 and March 2016, CMG posted each of the Images on its websites.
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`Cropped versions of the Hayek and Michele Images were both posted as rectangular banner
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`photographs at the top of webpages, called “Daily Dumps,” linking to celebrity gossip articles on
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`2
`In its pretrial briefing, CMG argued that it did not use the copyrighted version of the
`Loughrey Image, (Docket No. 43 (“Def. PFOF”) ¶ 22; Def. Opp’n, at 12), and therefore that
`Plaintiffs could not establish a claim of infringement as to that Image, but it withdrew that
`argument on the record at the final pretrial conference.
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`other websites; the Images were edited to include text referencing the “Daily Dump” and to
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`feature the CMG website’s logo. (PTX 28; PTX 30). A thumbnail version of the Hayek Image
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`also appeared in its entirety in the link roundup below the banner image. (PTX 28). The Bynes
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`Images were used in their entirety in conjunction with an article on a CMG website titled
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`“Amanda Bynes is Alive and Well in Mexico (and in a bikini) [Photos],” which commented on
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`the actress’s appearance and sought “to demonstrate her improved health after a stint in rehab
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`and turbulent behavior on social media.” (Def. PFOF ¶¶ 34, 37; see also PTX 29; DTX 22
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`(“Jackson Aff.”) ¶ 30-31). The Gomez Image was cropped to exclude the subject’s lower legs
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`and was included in a gallery of twenty-five images showcasing a “risqué” fashion trend
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`described by CMG as “Underbutt Fever.” (Def. PFOF ¶ 29; PTX 31; Jackson Aff. ¶ 23). The
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`Deschanel Image appeared at the bottom of an article titled “Zooey Deschanel Reveals Her Sea
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`Animal-Inspired Baby Name.” (PTX 34). Finally, the Loughrey and Horrocks Images were
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`used to accompany CMG articles titled “These Grown Ass People Waiting For the Royal Baby
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`Are Actually Psychotic” and “Mom Shells Out $57k To Look Like Daughter’s Twin and It’s
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`Creepier Than it Sounds,” respectively. (PTX 32, 33).
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`In May 2015, CMG received a cease-and-desist letter from FameFlynet regarding CMG’s
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`use of several of the Images, including the Hayek, Bynes, and Gomez Images. (Jackson Aff.
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`¶ 15-16; DTX 4). CMG’s then-President, Bryant Jackson, contacted FameFlynet’s head of sales,
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`Justin Smith, to discuss the letter, (Trial Tr. 84-85, 93), and the parties began negotiating a
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`subscription package pursuant to which CMG would continue nonexclusively using certain
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`FameFlynet photographs for a monthly fee, (Jackson Aff. ¶ 18; DTX 5). Jackson testified that,
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`in their first conversation following CMG’s receipt of the cease-and-desist letter, Smith told him
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`“not to worry” about the FameFlynet Images depicted in the letter. (Jackson Aff. ¶ 17). The
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`proposed subscription arrangement, however, was never consummated. (Jackson Aff. ¶ 19).
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`CMG subsequently deleted the Images included in the cease-and-desist letter, as well as other
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`licensed and unlicensed content, from its websites in August 2015. (Jackson Aff. ¶ 20). More
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`than one year later, on September 29, 2016, Plaintiffs filed the instant action.
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`DISCUSSION
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`There is no dispute that CMG used Plaintiffs’ validly copyrighted Images in whole or in
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`substantial part, and without authorization, thus establishing a prima facie case of copyright
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`infringement. See Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991) (“To
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`establish infringement, two elements must be proven: (1) ownership of a valid copyright, and
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`(2) copying of constituent elements of the work that are original.”). Instead, CMG defends its
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`use of the Images — or, more precisely, of all but one of the Images, as it concedes liability with
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`respect to the Deschanel Image, (see Def. PFOF ¶ 59) — on either or both of two grounds: first,
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`that Plaintiffs waived any infringement claim with respect to six of the Images and, second, that
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`CMG’s use of all of the Images was fair use under Section 106 of the Copyright Act. The Court
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`will address each defense in turn.
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`A. Waiver
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`CMG argues, first, that FameFlynet waived its infringement claims with respect to the
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`Hayek, Bynes, and Gomez Images. Under New York law, which the parties agree governs for
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`these purposes, “a claim of waiver requires proof of an ‘intentional relinquishment of a known
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`right with both knowledge of its existence and an intention to relinquish it.’” Capitol Records,
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`Inc. v. Naxos of Am., Inc., 372 F.3d 471, 482 (2d Cir. 2004) (quoting Airco Alloys Division,
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`Airco Inc. v. Niagara Mohawk Power Corp., 430 N.Y.S.2d 179, 187 (N.Y. App. Div. 1980)); see
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`also Johnson v. Zerbst, 304 U.S. 458, 464 (1938). It is well established, moreover, that “the law
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`disfavors agreements intended to absolve a party from the consequences of its wrongdoing.”
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`Joao v. Cenuco, Inc., 376 F. Supp. 2d 380, 382-83 (S.D.N.Y. 2005). Accordingly, “releases and
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`covenants not to sue are subject to the ‘closest of judicial scrutiny’ to determine the intent of the
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`parties.” Id.; see also Golden Pac. Bancorp v. FDIC, 273 F.3d 509, 515 (2d Cir. 2001) (“A
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`release will not be given effect unless it contains an explicit, unequivocal statement of a present
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`promise to release a party from liability.” (internal quotation marks and brackets omitted)); cf.
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`Schneider v. Revici, 817 F.2d 987, 993 (2d Cir. 1987) (“New York requires that a covenant not to
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`sue must be strictly construed against the party asserting it. Moreover, its wording must be clear
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`and unequivocal.” (internal quotation marks and ellipsis omitted)).
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`Measured against these standards, CMG’s argument that FameFlynet waived its
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`infringement claims is meritless. Its argument relies solely on Smith’s alleged statement to
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`Jackson that CMG was “not to worry” about the Images referenced in the May 2015 cease-and-
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`desist letter. But even assuming arguendo that Smith otherwise had authority to waive
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`FameFlynet’s rights, that stray comment cannot be construed as a knowing waiver for several
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`reasons. First, by Jackson’s own admission, Smith did not know about the cease-and-desist
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`letter, (Trial Tr. 93), let alone its contents, so it cannot be said that he intentionally relinquished a
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`right “with . . . knowledge of its existence.” Capitol Records, 372 F.3d at 482. Second, Smith
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`gave no explicit indication that he intended to release CMG from liability for infringement. See,
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`e.g. Golden Pac. Bancorp, 273 F.3d at 515. And third, the totality of circumstances makes clear
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`that Smith had no such intention. Most notably, following the “not to worry” comment, he and
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`Jackson made efforts to broker a licensing agreement pursuant to which CMG would pay for the
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`use of FameFlynet’s Images going forward — negotiations that would have been unnecessary
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`had FameFlynet already waived its infringement claims. See Joao, 376 F. Supp. 2d at 384 (“No
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`one would seriously entertain the possibility of taking a license if infringement claims had
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`already been released.”). In short, the evidence does not support CMG’s claim of waiver.
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`In the alternative, CMG’s waiver claim might be better understood as a claim that
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`FameFlynet granted CMG an implied nonexclusive license to use the Hayek, Bynes, and Gomez
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`Images. See, e.g., Graham v. James, 144 F.3d 229, 236 (2d Cir. 1998) (“A copyright owner who
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`grants a nonexclusive license to use his copyrighted material waives his right to sue the licensee
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`for copyright infringement.”). But CMG did not plead the existence of a license as an
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`affirmative defense, and thus waived any such claim. See id.; see also Bourne v. Walt Disney
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`Co., 68 F.3d 621, 631 (2d Cir. 1995) (“[T]he possession of a license by an accused infringer
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`traditionally has been characterized as a matter of affirmative defense.”). And, in any event, the
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`defense would fail on the merits, as it requires proof, at a minimum, “of a meeting of the minds
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`between the licensor and licensee such that it is fair to infer that the licensor intended to grant a
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`nonexclusive license.” Assoc. Press v. Meltwater U.S. Holdings, Inc., 931 F. Supp. 2d 537, 562
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`(S.D.N.Y. 2013). “There can be no meeting of the minds . . . where essential material terms are
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`missing.” Vian v. Carey, No. 92-CV-0485 (MBM), 1993 WL 138837, at *3 (S.D.N.Y. Apr. 23,
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`1993) (Mukasey, J.). And where, as here, the alleged licensing agreement is oral, “the agreement
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`between the parties must be definite and explicit so their intention may be ascertained to a
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`reasonable degree of certainty.” Id. at *2 (quoting Candid Prods., Inc. v. Int’l Skating Union,
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`530 F. Supp. 1330, 1333 (S.D.N.Y. 1982) (declining to find an oral nonexclusive licensing
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`agreement given the absence of any evidence that the defendant “ever intended . . . to enter into a
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`complex commercial licensing agreement”)); see also, e.g., SmithKline Beecham Consumer
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`Healthcare, L.P. v. Watson Pharm., Inc., 211 F.3d 21, 25 (2d Cir. 2000) (“Courts have found
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`implied licenses only in ‘narrow’ circumstances . . . .”).
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`Suffice it to say, Smith’s alleged “not to worry” comment does not establish that there
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`was a “meeting of the minds” between the companies to license the use of the Images. Indeed,
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`the subsequent attempt by the parties to negotiate a subscription arrangement reveals that both
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`sides believed it was necessary for CMG to pay for a license to continue using FameFlynet’s
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`copyrighted content. Furthermore, Smith’s statement included none of the “essential material
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`terms” necessary for a nonexclusive licensing agreement, and “the necessary consideration for
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`the contract [was] wholly lacking.” Vian, 1993 WL 138837, at *3. Finally, CMG’s decision to
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`remove the Images from its websites after its negotiations with FameFlynet fell through belies
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`any notion that CMG believed it had an implied nonexclusive license to continue using the
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`Images. At most, Smith’s statement could be construed as an agreement to agree or an
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`agreement to negotiate — neither of which is enforceable under New York law. See Joseph
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`Martin, Jr., Delicatessen, Inc. v. Schumacher, 417 N.E.2d 541, 543 (N.Y. 1981) (“[I]t is
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`rightfully well settled in the common law of contracts in this State that a mere agreement to
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`agree, in which a material term is left for future negotiations, is unenforceable.”). Accordingly,
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`to the extent CMG argues the existence of an implied license, that argument also fails.
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`B. Fair Use
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`The Court turns, then, to CMG’s other defense: fair use. See, e.g., Campbell v. Acuff-
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`Rose Music, Inc., 510 U.S. 569, 590 (1994) (holding that fair use is an affirmative defense).
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`Section 106 of the Copyright Act grants the owner of a copyrighted work “exclusive rights” over
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`the copyrighted work, including the rights “to reproduce the copyrighted work,” “to prepare
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`derivative works based upon the copyrighted work,” and “to distribute copies . . . of the
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`copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or
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`lending.” 17 U.S.C. § 106; see also Arista Records, LLC v. Doe 3, 604 F.3d 110, 117 (2d Cir.
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`2010) (“The owner of a copyright has the exclusive right to — or to license others to —
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`reproduce, perform publicly, display publicly, prepare derivative works of, and distribute copies
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`of, his copyrighted work.”). These protections are designed to further the essential purpose of
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`copyright law: the promotion of “not simply individual interests, but — in the words of the
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`Constitution — ‘the progress of science and useful arts’ for the benefit of society as a whole.”
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`TCA Television Corp. v. McCollum, 839 F.3d 168, 177 (2d Cir. 2016), cert. denied, 137 S. Ct.
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`2175 (2017). “Anyone who violates any of the exclusive rights of [a] copyright owner” is liable
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`for infringement. 17 U.S.C. § 501(a).
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`Nevertheless, and “consistent with this public purpose,” TCA Television, 839 F.3d at 178,
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`copyright protection does not “accord[] the copyright owner complete control over all possible
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`uses of his work,” Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 432 (1984).
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`In particular, “[a]ny individual may reproduce a copyrighted work for a ‘fair use,’” and such use
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`does not infringe upon the owner’s copyright. Id. at 433; see also 17 U.S.C. § 107. Fair use “is
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`an equitable rule of reason, which permits courts to avoid rigid application of the copyright
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`statute when, on occasion, it would stifle the very creativity which that law is designed to foster.”
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`Stewart v. Abend, 495 U.S. 207, 236 (1990) (citation omitted) (internal quotation marks omitted).
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`Its origins lie in the common law, but it is now codified in Section 107 of the Copyright Act,
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`which provides in relevant part as follows:
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`[T]he fair use of a copyrighted work, including such use by
`reproduction in copies . . . , for purposes such as criticism,
`comment, news reporting, teaching . . . , scholarship, or research, is
`not an infringement of copyright. In determining whether the use
`made of a work in any particular case is a fair use the factors to be
`considered shall include —
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`(1) the purpose and character of the use, including whether
`such use is of a commercial nature or is for nonprofit
`educational purposes;
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`(2) the nature of the copyrighted work;
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`(3) the amount and substantiality of the portion used in
`relation to the copyrighted work as a whole; and
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`(4) the effect of the use upon the potential market for or
`value of the copyrighted work.
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`17 U.S.C. § 107; see also Campbell, 510 U.S. at 577 (“Congress meant § 107 to restate the
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`present judicial doctrine of fair use, not to change, narrow, or enlarge it in any way and intended
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`that courts continue the common-law tradition of fair use adjudication.” (internal quotation
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`marks omitted)). Fair use analysis must be conducted on a “case-by-case” basis, and the
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`statutory factors may not “be treated in isolation,” but must “[a]ll . . . be explored, and the results
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`weighed together, in light of the purposes of copyright.” Campbell, 510 U.S. at 577-78. The
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`analysis is ultimately aimed at determining whether a use is the type “that furthers the essential
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`goal of copyright law and should be excused from liability for infringement.” Estate of Smith v.
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`Cash Money Records, Inc., No. 14-CV-2703, 2017 WL 2333770, at *7 (S.D.N.Y. May 30,
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`2017).
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`Here, CMG asserts fair use with respect to eleven of the twelve Images at issue (namely,
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`all but the Deschanel Image). The Court will consider each of the four fair use factors in turn,
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`addressing the Images together or in groups to the extent possible. See, e.g., Cariou v. Prince,
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`714 F.3d 694, 706-10 (2d Cir. 2013) (examining twenty-five artworks together because they
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`shared common aesthetics and characteristics, and separating out five additional works for more
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`individualized analysis). Ultimately, however, the Court must — and does — make a separate
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`determination as to fair use with respect to each of the eleven Images at issue. See, e.g., Craft v.
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`Kobler, 667 F. Supp. 120, 123 (S.D.N.Y. 1987).
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`1. The Purpose and Character of the Use
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`The first statutory fair use factor is “the purpose and character of the use, including
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`whether such use is of a commercial nature or is for nonprofit educational purposes.” 17 U.S.C.
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`§ 107(1). The analysis is “guided by the examples given in the preamble to § 107, looking to
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`whether the use is for criticism, or comment, or news reporting, and the like.” Campbell, 510
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`U.S. at 578-79 (citation omitted). “The central purpose of this investigation is to see . . . whether
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`the new work merely supersedes the objects of the original creation, or instead adds something
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`new, with a further purpose or different character, altering the first with new expression,
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`meaning, or message; it asks, in other words, whether and to what extent the new work is
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`transformative.” Id. at 579 (citations omitted) (internal quotation marks and brackets omitted).
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`“If the secondary use adds value to the original — if copyrightable expression in the original
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`work is used as raw material, transformed in the creation of new information, new aesthetics,
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`new insights and understandings — this is the very type of activity that the fair use doctrine
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`intends to protect for the enrichment of society.” Castle Rock Entm’t, Inc. v. Carol Pub. Grp.,
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`Inc., 150 F.3d 132, 142 (2d Cir. 1998) (internal quotation marks and brackets omitted).
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`Transformative use is neither “absolutely necessary” nor sufficient for a finding of fair use, but
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`original works that have been transformed by a subsequent user “lie at the heart of the fair use
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`doctrine’s guarantee of breathing space within the confines of copyright, and the more
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`transformative the new work, the less will be the significance of other factors . . . that may weigh
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`against a finding of fair use.” Campbell, 510 U.S. at 579 (citations omitted).
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`Applying those standards here, the first factor cuts strongly against CMG. CMG’s use of
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`the Images had no transformative effect because it displayed the Images in the same manner and
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`for the same purpose as they were originally intended to be used. Paparazzi photographs — the
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`bulk of the Images — are designed to document the comings and goings of celebrities, illustrate
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`their fashion and lifestyle choices, and accompany gossip and news articles about their lives. As
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`CMG points out, such images are fleetingly relevant and have limited staying power (and
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`therefore market power) beyond a short window in which they offer timely news and gossip
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`about their subjects. (Coakley Aff. ¶ 23). The purposes for which CMG used the Images — to
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`serve as banner images and thumbnails for “Daily Dumps” of celebrity news (namely, the Hayek
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`and Michele Images); to accompany articles about celebrity gossip and human interest stories
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`(namely, the Bynes, Loughrey, and Horrocks Images); and to be included in roundups of
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`celebrity fashion trends (namely, the Gomez Image) — are all consistent with the original intent
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`behind taking and copyrighting the Images. Thus, CMG’s use was not transformative.
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`CMG is correct in noting that the preamble of Section 107 carves out categories of
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`reproduction that are likely to constitute fair use, but it is incorrect in asserting that its use of the
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`Images fell within one of those categories. Display of a copyrighted image or video may be
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`transformative where the use serves to illustrate criticism, commentary, or a news story about
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`that work. See 17 U.S.C. § 107. For instance, a news report about a video that has gone viral on
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`the Internet might fairly display a screenshot or clip from that video to illustrate what all the fuss
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`is about. See, e.g., Konangataa v. Am. Broadcastingcompanies, Inc., No. 16-CV-7382 (LAK),
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`2017 WL 2684067, at *1 (S.D.N.Y. June 21, 2017). Similarly, a depiction of a controversial
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`photograph might fairly accompany a work of commentary or criticism about the artistic merit or
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`appropriateness of the photograph. See, e.g., Nunez v. Caribbean Int’l News Corp., 235 F.3d 18,
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`25 (1st Cir. 2000). In each such case, the copyrighted work is itself the subject of the story,
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`transforming the function of the work in the new context.
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`Notwithstanding CMG’s assertions, however, that is not what happened here. With
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`respect to the Bynes Images, CMG used photographs of an actress to accompany a story about
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`the appearance of that actress, which could be seen in the displayed photographs. The Gomez
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`Image appeared in an album containing photographs of celebrities participating in the
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`“underbutt” fashion trend. And for the Loughrey and Horrocks Images, CMG used photographs
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`depicting the subjects of human interest stories — about mania surrounding the birth of the royal
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`baby and a mother’s plastic surgery to resemble her daughter, respectively — to accompany
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`articles about those topics. CMG’s articles did not comment on, criticize, or report news about
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`the Images themselves; instead, they used the Images as illustrative aids because they depicted
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`the subjects described in its articles. CMG’s argument, if accepted, would eliminate copyright
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`protection any time a copyrighted photograph was used in conjunction with a news story about
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`the subject of that photograph. That is plainly not the law. See, e.g., BWP Media USA, Inc. v.
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`Gossip Cop Media, Inc., 196 F. Supp. 3d 395, 406 n.6 (S.D.N.Y. 2016) (“Defendant confuses the
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`situation in which the photograph is the story . . . and the scenario present here, in which the
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`contents of the photograph are of some public interest. . . . Newsworthy contents will rarely
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`justify unlicensed reproduction; were it otherwise, photojournalists would be unable to license
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`photos, and would effectively be out of a job.”).
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`Similarly, CMG’s argument that it transformed the Hayek and Michele Images by using
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`them as banner photographs on its “Daily Dump” gossip roundups fails. CMG claims that it
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`used the photographs to entice its visitors to other websites containing celebrity news and gossip,
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`thereby adding new information or meaning to the photographs, but CMG points to no new
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`information or meaning it infused into the Hayek and Michele Images by pairing them with links
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`to articles about those celebrities. CMG further argues that it turned the Images into “collages”
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`Case 1:16-cv-07634-JMF Document 55 Filed 11/02/17 Page 14 of 28
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`by adding text to those Images. Original works clearly may be transformed through the addition
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`of text or other forms of expression. See Cariou, 714 F.3d at 706-10; Blanch v. Koons, 467 F.3d
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`244, 257 (2d Cir. 2006). But here, the text appended to the Images were the words “Daily
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`Dump,” the title of CMG’s link roundup, and those words added no meaning or information to
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`the Images themselves and imbued the originals with no new creative or expressive purpose.3
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`Further counseling against a finding of fair use is the commercial nature of CMG’s use of
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`the Images. “The crux of the profit/nonprofit distinction is . . . whether the user stands to profit
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`from exploitation of the copyrighted material without paying the customary price.” Harper &
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`Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 562 (1985). Here, CMG’s business model
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`turned on displaying, often without authorization, paparazzi photographs on its websites. It
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`deliberately used images that it did not — and admittedly could not afford to — license in order
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`to lure traffic and illustrate its celebrity and human interest content. By featuring Plaintiffs’
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`Images prominently alongside headlines and news articles about the subjects of those Images,
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`CMG naturally “st[ood] to profit from exploitation of the copyrighted material without paying
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`the customary price.” Id. This was designed to serve CMG’s bottom line. CMG’s argument
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`that its use of the Images was not commercial because CMG’s websites are unprofitable is
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`unavailing: The commercial or nonprofit nature of a venture is not determined by whether it was
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`successful commercially. Accordingly, the first statutory factor weighs heavily against CMG, as
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`its use of the Images was non-transformative and commercial.
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`3
`Relying on Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007), and
`Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003), CMG also argues that the thumbnail
`version of the Hayek Image was transformative because it served a different function from the
`original Image, namely directing website visitors to other gossip and entertainment websites
`displaying a full-size version of that Image. (Def. PFOF ¶ 18). Because CMG also used the
`Hayek Image as a banner photographs on the same webpage, and because that use was not fair, it
`is unnecessary to address whether displaying the Image in thumbnail version constituted fair use.
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`Case 1:16-cv-07634-JMF Document 55 Filed 11/02/17 Page 15 of 28
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`2. The Nature of the Copyrighted Work
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`By contrast, the second statutory factor, “the nature of the copyrighted work” or “the
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`value of the materials used,” Campbell, 510 U.S. at 586, cuts slightly in CMG’s favor. The
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`second factor “calls for recognition that some works are closer to the core of intended copyright
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`protection than others, with the consequence that fair use is more difficult to establish when the
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`former works are copied.” Id. Specifically, copyrighted works that are creative or fictional are
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`closer to the core of copyright, and therefore less likely to be fairly used, than works that are
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`factual in nature. See id. (collecting cases); see also Stewart, 495 U.S. at 237 (“In general, fair
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`use is more likely to be found in factual works than in fictional works.”). That said, “[t]he mere
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`fact that the original is a factual work . . . should not imply that others may freely copy it,” as
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`“authors of factual works, like authors of fiction, should be entitled to copyright protection of
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`their protected expression.” Authors Guild v. Google, Inc., 804 F.3d 202, 220 (2d Cir. 2015),
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`cert. denied, 136 S. Ct. 1658 (2016). Because both creative and factual original works are
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`entitled to some level of copyright protection, the second fair use factor is frequently not much
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`help in a fair use analysis. See, e.g., Campbell, 510 U.S. at 586; Blanch, 467 F.3d at 257; Bill
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`Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 612 (2d Cir. 2006).
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`This factor weighs in favor of CMG, but only marginally so, because Plaintiffs’ Images
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`are essentially factual in nature. The photographers predominantly captured their subjects in
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`public, as they naturally appeared, and were not tasked with directing the subjects, altering the
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`backdrops, or otherwise doing much to impose creative force on the Images or infuse the Images
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`with their own artistic vision. Although photogr