Ethan and Hila Klein, professional YouTubers known as h3h3Productions, have successfully argued that their inclusion of copyright clips in one of their YouTube videos was fair use under American copyright law, following a summary judgment from District Judge Katherine Forrest in the United States Southern District Court of New York.

The decision will have important ramifications for content creators who publish work in the United States and it demonstrates the differences and similarities between the American fair use doctrine and Australia's more limited doctrine of fair dealing.

This is particularly relevant given the recent response of the Australian Government to the Productivity Commission's Inquiry Report on Intellectual Property Arrangements (see our article here), where the Government "noted" the Commission's recommendation that Australia adopt a fair use doctrine modelled on that in the US, and stated it would further consult on the issue (see Recommendation 6.1).

The contentious YouTube videos

The case concerned a video uploaded to YouTube by the h3h3Productions channel (a re-upload is available here, if you're interested), in which the Kleins mock a video of another professional YouTuber, Matt Hosseinzadeh. The five-minute video by Mr Hosseinzadeh is a fictional portrayal of a character played by the author chasing after a woman who challenges him to a parkour race; to date it has received over 11 million views.

The Kleins' video intercuts clips from Hosseinzadeh's video with their commentary, as the couple criticise a range of aspects of the video including the production values of the segment, Mr Hosseinzadeh's fashion styling and the author's portrayal of women.

This is an example of a genre on YouTube of "reaction videos", where YouTubers comment on videos made by other people (in a similar vein to the Australian Gogglebox television show). As reaction videos often involve using segments from the original video, their status in terms of copyright infringement under American law was unclear until now.

The copyright infringement and fair use dispute

The Kleins' reaction video gained popularity, causing Mr Hosseinzadeh to submit a Digital Millennium Copyright Act (DMCA) takedown notification to YouTube regarding the video.

As described by District Judge Forrest, the DMCA governs a process by which copyright holders can notify online service providers that their sites host material which allegedly infringes copyright. Such notices must include a statement that the complainant has a good faith belief that the material constitutes copyright infringement.

YouTube responded by taking down the Kleins' video, which led them to submit a DMCA counter-notification challenging Mr Hosseinzadeh's notice and claiming that the video was fair use of the original work, and therefore did not infringe Mr Hossenzadeh's copyright in the video.

Following this, the legal action in question was filed, with Mr Hosseinzadeh alleging copyright infringement and misrepresentation by virtue of the Kleins' DMCA notice.

Pre-trial developments and public attention

The case drew significant public attention, including an article in TIME explaining that it might "change YouTube forever".

The Kleins crowdsourced the funding for their legal case, raising more than USD$170,000 from a GoFundMe campaign. The couple also published a further video entitled "We're Being Sued", which discussed the lawsuit and criticised Mr Hosseinzadeh, who promptly responded by amending his complaint to include a defamation claim.

Both parties moved for summary judgment.

American principles of fair use

District Judge Forrest outlined the legal principles of the doctrine of fair use under American law, by which consideration is given to:

  1. the purpose and character of the use, including whether such use is of a 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; and
  4. the effect of the use upon the potential market for or value of the copyrighted work.

Her Honour noted that it is the first factor which is normally determinative of a fair use claim, and further stated that use will generally be fair where it is "transformative", in that it adds something new to the original work with a further purpose or character. In this regard Her Honour said that "among the best recognised justifications for copying from another's work is to provide comment on it or criticism of it".

District Judge Forrest also stated that the second factor is rarely determinative; that the third factor involves considering the quality, as well as the quantity, of the work taken; and that the fourth factor focuses on whether the secondary use offers a substitute for the original, not merely whether it damages the market for the original.

The Kleins' reaction video was fair use

Applying the above principles, District Judge Forrest found that the Kleins' use of Mr Hosseinzadeh's video was fair use, and therefore issued summary judgment in their favour.

The deciding factor was her Honour's finding that the Kleins' video offered criticism and comment on Mr Hosseinzadeh's video, which made it a "classic example" of fair use, regardless of the merit of this criticism.

In relation to the second factor, the fact that Mr Hosseinzadeh's video was a creative work of non-fiction weighed against a finding of fair use, although this was not enough to overcome the other factors.

The third factor of substantiality was neutral, in that, while the Kleins had reproduced a significant amount of the copyright material, they had done so because this was necessary to provide comment on it.

In relation to the fourth factor, Her Honour found that the Kleins' video did not serve as a substitute for Mr Hosseinzadeh's video, as it transformed the original work into "fodder for caustic, moment-by-moment commentary and mockery". The fact that viewers may be less likely to seek out Mr Hosseinzadeh's video as a result of the secondary use was not relevant, just as it is not relevant where a scathing review may damage the reputation of the institution being reviewed.

Remaining issues of defamation and misrepresentation

The remaining issues were whether the Kleins' DMCA notice involved a misrepresentation and whether the Kleins had defamed Mr Hosseinzadeh.

District Judge Forrest dealt with these issues swiftly, finding that the DMCA notice did not include a misrepresentation, as the Kleins' claim of fair use had been proven to be factually accurate and, in any event, they had a subjective good faith belief that their video was fair use.

Similarly, the Kleins had not defamed Mr Hosseinzadeh because their video "We're Being Sued" contained mostly "non-actionable opinions" and any explicit statements were, in any event, substantially true.

The case under Australian copyright law

This case would have played out differently under Australian law, although it is likely that the result would have been the same.

Australia does not have a broad fair use exception to copyright infringement, but rather a far more narrow exception of fair dealing, which covers use for: research or study, criticism or review, parody or satire, reporting news, or the purpose of judicial proceedings or professional advice by a lawyer or attorney.

The case would likely have turned on whether the Kleins' video was for the purpose of "criticism or review" under Australian law, which the Federal Court, Full Federal Court, and High Court considered in one of the only Australian cases on fair dealing, Network Ten Pty Ltd v TCN Channel Nine [2004] HCA 14.

In that case, the Federal Court found that criticism and review involves "the passing of judgment", and must be "strongly expressed", be "genuine and not a pretence for some other form of purpose", and involve an acknowledgement of the original authors. As with the American law, the quantity and quality of the material used will also be relevant.

While the lack of case law on Australia's fair dealing exceptions makes it difficult to determine, it is likely that the Kleins' video would have also been exempt from copyright infringement under Australian law, however for different and narrower reasons than were determinative in the case as run in America.

Observations

  1. With Australian lawmakers once again considering a recommendation that Australia adopt a fair use doctrine based on that of America, similar principles as were applied in the Klein case may eventually be relevant to Australian law.
  2. Until such an adoption, under Australian law, creators of content such as reaction videos will need to rely on our narrower fair dealing exceptions.