In copyright infringement action involving unlicensed use of humorous “viral videos,” district court denies copyright owner’s motion for partial summary judgment, concluding that all but one of allegedly infringing programs featuring videos were fair use, because alleged infringer added text, graphics and commentary on the videos.

Equals Three, LLC filed a declaratory judgment action against Jukin Media, Inc., seeking a ruling that its use of user-generated “viral” Internet video clips licensed by Jukin Media, Inc., constituted fair use, and that Jukin had violated the Digital Millennium Copyright Act (DMCA) by submitting improper take-down notices to YouTube. Jukin uploads the video clips it licenses to its YouTube channel and its own websites, monetizes the videos through third-party syndicators that use the videos to generate advertising revenue, and licenses the videos for use on traditional media platforms such as television programs. Equals Three, LLC produces and distributes on YouTube short, humorous programs, in which three viral videos (typically edited and “inset within a decorative graphical frame”) are shown. A comedian-host describes and discusses the video clips with the help of graphics, animation, text, voice-overs and sound effects. The 13 clips at issue in the case were all user-generated videos featuring one of the following: “a slapstick-style mishap, an animal in a humorous situation, or simply a cute video of an animal (such as a dachshund chasing a crab on the beach).”

The district court denied Jukin’s motion for partial summary judgment, concluding that, with the exception of the one program, Jukin failed to show that Equals Three’s use of the videos was not fair use under the Copyright Act.

The district court addressed each of the four fair use factors in turn. Regarding the first factor — the purpose and character of the use — the district court found it difficult to determine “whether Equals Three’s episodes, which undisputedly use graphics and narration to tell jokes about the events depicted in the videos, criticize these videos — which were themselves made to serve the purpose of humor and entertainment — or simply point out their inherent humor.” The district court concluded that, even assuming Equals Three did not parody the videos, Equals Three’s programs nevertheless commented on or criticized the videos through the host’s discussion of the videos, which did not just rehash what was pictured but, rather, highlighted the “ridiculousness” of the videos “by creating fictionalized narratives of how the events transpired, using similes, or by directly mocking the depicted events and people.” Whether or not Equals Three criticized Jukin’s videos, the events depicted in them “are the butt of Equals Three’s jokes,” the court noted. Therefore, the district court concluded that all but one of Equals Three’s programs were “highly transformative” and, further, that the transformativeness outweighed the “admittedly commercial” nature of the use.

On the second factor — the nature of the copyrighted work — the district court found that the fact that Jukin’s works were creative in nature was not particularly important in light of the highly transformative nature of Equals Three’s use.

Regarding the third factor — the amount and substantiality of the portion used — the district court determined that while Equals Three uses the “arguable heart” of Jukin’s videos in its programs, it does not show any more of the videos than is necessary for purposes of commentary and criticism, thus favoring fair use.

Finally, the district court addressed the fourth factor — market harm to Jukin’s videos. It rejected Jukin’s claim of harm to “a licensing market for shows that critique and mock [Jukin’s] videos in the manner that Equals Three does” because there is “no cognizable derivative market for criticism.” Though Equals Three’s viewers might plausibly use the episodes as a substitute for Jukin’s videos, the court found that the record before it contained no actual evidence of such market harm. Therefore, the fourth factor did not favor either party.

The court found that the factors weighed in favor of fair use for all the Equals Three episodes at issue except the one called “Sheep to Balls.” The district court found that “Sheep to Balls” did not make fair use of Jukin’s video “First person to buy iPhone 6 in Perth drops it on live TV when pressured by reporters” because it was not transformative and was likely to cause market harm.

Though Equals Three asserted that it used Jukin’s footage to make two points — (1) “don’t be first at shit” and (2) Apple Inc.’s method of packaging iPhones at the top of the box is “absurd”  — the court found these to be general, broad points that were not directly aimed at criticizing or commenting on Jukin’s video. “The use of Jukin’s footage to make these two points is akin to using news footage without adding anything transformative to what made the footage valuable — in this case a clear view of the first person to obtain the iPhone 6 in Perth dropping the phone upon opening its package,” the court explained.