Advanced Copyright Issues on the Internet - Fenwick & West LLP

copying was a fair use. The court ruled that the first fair use factor (purpose and character of theuse) weighed against the defendant because the defendant’s purpose for the use was commercial– although defendant was not charging users a fee for the service, “defendant seeks to attract asufficiently large subscription base to draw advertising and otherwise make a profit.” 116 Thecourt rejected the defendant’s argument that the copying was transformative because it allowedusers to “space shift” their CDs into another format in which they could enjoy their soundrecordings without lugging around physical CDs, ruling that the argument was “simply anotherway of saying that the unauthorized copies are being retransmitted in another medium – aninsufficient basis for any legitimate claim of transformation.” 117With respect to the second factor (nature of the copyrighted work), the court held that,because the copyrighted works at issue were creative musical works, this factor weighed againstdefendant. 118 The third factor (amount and substantiality of the copyrighted work used) alsoweighed against the defendant because the defendant had copied, and the My.MP3 servicereplayed, the copyrighted works in their entirety. 119Finally, with respect to the fourth factor (effect of the use upon the potential market foror value of the copyrighted work), the court noted that the defendant’s activities “on their faceinvade plaintiffs’ statutory right to license their copyrighted sound recordings to others forreproduction.” 120 The defendant argued that its activities enhanced the plaintiffs’ sales, sincesubscribers could not gain access to recordings through MP3.com unless had already purchased,or agreed to purchase, their own CD copies of those recordings. The court rejected thisargument on the following rationale:Any allegedly positive impact of defendant’s activities on plaintiffs’ prior marketin no way frees defendant to usurp a further market that directly derives fromreproduction of the plaintiffs’ copyrighted works. This would be so even if thecopyrightholder had not yet entered the new market in issue, for acopyrightholder’s “exclusive” rights, derived from the Constitution and the<strong>Copyright</strong> Act, include the right, within broad limits, to curb the development of116117118119120without authorization, from plaintiffs’ copyrighted CDs. On its face, this makes out a presumptive case ofinfringement under the <strong>Copyright</strong> Act of 1976 ….” 92 F. Supp. 2d at 350.Id. at 351.Id. Contrast this holding with the Ninth Circuit’s statement in RIAA v. Diamond Multimedia Sys., 180 F.3d1072, 1079 (9th Cir. 1999), in which the Ninth Circuit found space shifting of a recording from a CD onto the“Rio” portable MP3 player device (through a process known as “ripping,” or re-encoding of music dataencoded in CD format into the MP3 file format) to be “paradigmatic noncommercial personal use entirelyconsistent with the purposes of the [Audio Home Recording Act].”UMG, 92 F. Supp. 2d at 351-52.Id. at 352.Id.- 39 -