In an illuminating, though not startling, fair use opinion, the United States Court of Appeals, Fourth Circuit provided guidance on the meaning of “transformativeness” in the context of Internet and technology-based services. A.V. v. iParadigms LLC, 562 F.3d 630 (4th Cir. 2009), holds that copying student papers into a database for purposes of detecting plagiarism constitutes fair use. The court’s analysis also illustrates an important point about fair use analysis which has emerged with increasing clarity in recent years. Namely, while courts continue to apply all four factors set forth in 17 U.S.C. §107, contemporary fair use analysis is in fact controlled by two considerations — transformativeness and market impact.

iParadigms LLC operates “Turnitin Plagiarism Detection Service,” an online system marketed to schools as a tool to detect plagiarism by its students. Turnitin compares students’ submissions with content that is available on the Internet, contained in databases of academic publications, or archived in iParadigms’s own collection of earlier student submissions. Participating schools have the option of “archiving” their students’ submissions in Turnitin’s permanent digital database. Such archived works are electronically compared with future submissions but are not read or reviewed by any iParadigms employee.

Plaintiffs — high school students who were required to submit their papers to Turnitin — sued iParadigms, alleging that archiving their works constituted copyright infringement. The district court granted summary judgment against them on two grounds — that iParadigms’ copying represented fair use and the students’ accepted a click-wrap license that waived all claims against iParadigms. On de novo review, the Fourth Circuit affirmed summary judgment based solely on the fair use defense.

Treading familiar ground, the court began by noting that under the first statutory factor, the purpose and character of the use, the commercial nature of iParadigms’s activity weighed lightly. Rather, the key consideration was the degree to which the use was “transformative” — employing the work in a different manner or for a different purpose from the original. The Court of Appeals agreed with the district court that detection of plagiarism represented a highly transformative use, even “without altering or actually adding to the original work.”

The Court of Appeals also held that the transformative nature of the use neutralized any consideration under the second factor, the nature of the copyrighted work, that the students’ works were creative and expressive (i.e., as opposed to factual) and unpublished. While noting that fair use is less likely to be found when the copyrighted work is a creative product, it explained that iParadigms’s use was not at all related to the creative character of the student works and the use itself did not supplant the students’ right of first publication.

Likewise, in analyzing the third factor, the amount of the copyrighted work used, the court held this factor was neutral in light of the limited purpose of the use — for electronic “comparison purposes only” — notwithstanding the fact that iParadigms copied the entirety of the student works. In short, since the purpose did not involve use of the works’ expressive content, it did not matter how much was taken. Indeed, the court even implies that taking the entirety of the work does not tilt against fair use because the “quality and importance” of what is taken might not be deemed “the heart of the copyrighted work” when it is taken for a nonexpressive purpose.

Under the fourth factor, the court considered a number of theories under which the use by the Turnitin service might injure the potential market for or the value of the students’ works, and rejected all of them. The most plausible theory was that iParadigms’ archiving impaired the sale of the papers to high school students in the market for unpublished papers because the Turnitin service made it more difficult for such potential buyers to evade detection as plagiarists. Likening the situation to the effect of parodies, the court concluded that the effect of Turnitin’s plagiarism detection would be to suppress such demand, not supplant it; hence any harm is not of the kind protected against by copyright law. Since iParadigms’ transformative use was not a substitute for the original works, this factor was held to tilt in favor of fair use.

While there was nothing revolutionary in the Fourth Circuit’s analysis or its application of fair use principles, the case does confirm that transformativeness plays a commanding role in contemporary fair use analysis. The case will also be seen as providing comfort to high technology innovators and enterprises that often use the works of others at a level unseen by humans and where the copyrighted work itself may never be read or perceived by a single person. This case tends to strengthen the argument that such uses would constitute fair use.