This week, the Court considers the fair use defense to copyright infringement and addresses the proper venue for petitions to enforce arbitral summonses.

McGUCKEN v. PUB OCEAN LIMITED

The Court rejects a fair use defense to copyright infringement for the reproduction of photographs in an online article.

The Panel: Judges Ikuta, Nguyen, and Owens, with Judge Nguyen writing the opinion.

Key highlight: “Practically speaking, it is hard to imagine what would not be a fair use, or what could not be readily turned into a fair use, under Pub Ocean’s theory. Any copyrighted work, when placed in a compilation that expands its context, would be a fair use. Any song would become a fair use when part of a playlist. Any book a fair use if published in a collection of an author’s complete works. It would make little sense to treat this kind of ‘recontextualizing’ or ‘repackaging’ of one work into another as transformative.”

Background: Plaintiff Elliot McGucken is a photographer who took photos of a lake that, following heavy rains, formed briefly on the floor of Death Valley. Defendant Pub Ocean used 12 of McGucken’s photos without his permission in an online article about the temporary lake. McGucken responded by filing suit for copyright infringement. The district court granted Pub Ocean’s motion for summary judgment on the ground that it was entitled to a fair use defense.

Result: The Ninth Circuit reversed. Addressing each of the four statutory factors in turn, the Court held that all “point unambiguously in the same direction—that Pub Ocean is not entitled to a fair use defense.”

First, considering the “purpose and character” of Pub Ocean’s use, the Court concluded that it was commercial and non-transformative. As the Court explained, “[w]hen a copyrighted work is used simply to illustrate what that work already depicts, the infringer adds no further purpose or different character.” And here, Pub Ocean’s article did not “present McGucken’s photos in a new or different light,” but simply “use[d] them for exactly the purpose for which they were taken: to depict the lake.” Nor did the article “transform” the pictures by including text about them: providing informative captions is not necessarily transformative, and in any event the captions were not particularly informative. The Court rejected Pub Ocean’s arguments that “the mere arrangement of McGucken’s photos into a ‘montage,’” or its placing them into a “wider context,” “rendered [its] use transformative.” Likewise, even if Pub Ocean’s purpose was to report the news, that did not make its use of McGucken’s photos transformative, as Pub Ocean was not reporting on those photos, but simply using them for its story about the Death Valley lake.

Second, addressing the “nature” of McGucken’s “copyrighted work,” the Court concluded that the “photos are creative because they were the product of many technical and artistic decisions.” The fact they had been previously published online did not weigh in favor of fair use.

Third, the Court also concluded that the “amount and substantiality of the portion” of the copyrighted work used weighed against fair use. The Court rejected Pub Ocean’s argument that this factor favored it because its article also used 28 other photos, explaining that this “inquiry calls for a comparison of ‘the portion used’ to ‘the copyrighted work as a whole’ and not the infringing work.” Here, Pub Ocean had taken almost the entirety of 12 of McGucken’s photos, which could not be justified.

Finally, the Court also concluded that the fourth factor, “the effect of the use upon the potential market for or value of the copyrighted work,” weighed against fair use. The Court reasoned that while the record contained little direct evidence of actual market harm, it was clear that “[i]f carried out in a widespread and unrestricted fashion, Pub Ocean’s conduct would destroy McGucken’s licensing market.”

JONES DAY v. ORRICK, HERRINGTON & SUTCLIFFE, LLP

The Court held that Jones Day’s petition to enforce arbitral summonses against Orrick was properly brought in the U.S. District Court for the Northern District of California.

The panel: Judges Wardlaw, Ikuta, and Bade, with Judge Wardlaw writing the opinion.

Key highlight: “Not only are these proceedings ‘related to’ an arbitration agreement falling under the [United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards], petitions to enforce a summons issued by the arbitrator are necessary ancillary proceedings that ensure the proper functioning of the underlying arbitration.”

Background: The case arose out of a dispute between Jones Day and one of its former partners who left to join Orrick. Under Jones Day’s partnership agreement, the parties were required to arbitrate their dispute, and so the dispute proceeded to arbitration in Washington D.C., the location designated in the arbitration agreement. At Jones Day’s request, the arbitrator issued a subpoena for Orrick to produce certain documents Jones Day argued were material to its claims. When Orrick failed to comply, Jones Day sought to enforce it in the Superior Court of the District of Columbia, but that court dismissed for lack of personal jurisdiction over Orrick, whose principal place of business is San Francisco and because Sec. 7 of the FAA required Jones Day to file its action to enforce an arbitral subpoena in a United States district court. The arbitrator then issued a revised subpoena requiring Orrick partners residing in the Northern District of California to appear for a hearing, but they too refused, and Jones Day filed this action to enforce in the Northern District of California. The district court denied the petition, concluding that under Sec. 7 of the FAA only the district court where the arbitrator sits can compel attendance.

Result: The Ninth Circuit reversed. The Court first held that the district court had subject matter jurisdiction to enforce the arbitral summonses. Under FAA Section 203, federal district courts have original jurisdiction over “[a]n action or proceeding falling under the Convention.” The petition to compel enforcement of arbitral summonses was such a proceeding because it was an “action or proceeding” and “fall[s]” under the Convention” even though the Convention does not expressly mention arbitral summonses as an available tool. In particular, the Court held that a federal court will have original jurisdiction over an action or proceeding under Section 203 if (1) there is an underlying arbitration agreement or award that falls under the Convention, and (2) the action or proceeding relates to that arbitration agreement or award. Because the underlying arbitration agreement fell under the Convention and because the petition to compel Orrick’s compliance with arbitral summonses related to the underlying arbitration agreement, jurisdiction existed.

The Court next addressed the proper venue for this action. Under Section 204 of the FAA, such actions or proceedings “may be brought in any such [district] court in which save for the arbitration agreement an action or proceeding with respect to the controversy between the parties could be brought, or in such court for the district and division which embraces the place designated in the agreement as the place of arbitration if such place is within the United States.” The Court agreed with Jones Day that Section 204 is a non-exclusive venue provision that supplements, rather than supplants, other venue rules. Under the general venue statute, 28 U.S.C. § 1391, venue was proper in the Northern District of California because it was Orrick’s principal place of business. And nothing in Section 204 of the FAA indicated that it nullified that general venue provision.