Supreme Court: When Is a Derivative Work a Transformative Fair Use?


Fair use is probably the most-mentioned, but least-understood, aspect of copyright. It's challenging to predict the outcome in fair use cases because it is so fact-specific. Hopefully, the Supreme Court will give us more guidance in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith. In that case, the Court will consider whether the changes Andy Warhol added to a famous picture were fair use — thus defeating an accusation of infringement against Warhol.


Originally a judge-made doctrine, Congress codified fair use in the Copyright Act of 1976 using the same four factors that were established in case law. The four factors are:

  1. The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes.

  2. The nature of the copyrighted work.

  3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole.

  4. The effect of the use upon the potential market for, or value of, the copyrighted work.

This case is important because, in recent years, a trend has developed in which certain factors are more favored than others. “Transformativeness,” which is derived from factor one, has become dominant in many decisions.


According to an empirical study cited by the American Intellectual Property Lawyers Association (AIPLA) in its amicus brief:

  • In 94% of cases in which a use was found to be transformative, the court found the use to be fair use.

  • Transformative use decisions historically accounted for 51% of all fair use decisions, but the percentage has risen to “closer to 90%” of cases in recent years.

A derivative work takes a previous work and re-casts it into something new. The statutory definition can be found in § 101 of the Copyright Act. It states a derivative work is a work based on one or more preexisting works, such as a translation; musical arrangement; dramatization; fictionalization; motion picture version; sound recording; abridgement; condensation, or any other form in which a work may be recast, transformed or adapted. A derivative work based on another work contains enough modifications to represent an original work of authorship.


If fair use analysis is limited to whether or not a work is transformative, there is a risk that the scales will weigh too heavily in favor of fair use because, by definition, every derivative work is transformative. Allowing transformative use to dominate the other three factors risks downgrading an author’s right to create derivative works.


Transforming something from a book to a movie is a substantial undertaking that involves many modifications after the underlying work is published, but that doesn't mean it's a fair use — to the contrary. Any film adaptation is a derivative work, and the producers need permission from the author of the underlying work.


Oral argument in the Warhol case is scheduled to take place on October 12, 2022. It will be interesting to see how the justices grapple with the history of common law fair use, as well as the intent of Congress in enacting the Copyright Act of 1976. Will they reign in the role transformativeness has taken on in fair use cases, or allow it to continue to dominate the analysis?


If you have questions about fair use, feel free to schedule a consultation with me.



Nancy J. Mertzel

Mertzel Law PLLC

5 Penn Plaza, 19th Floor

New York, NY 10001

info@mertzel-law.com

(646) 965-6900


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