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Fair Use After the Supreme Court’s Warhol Decision—and What It Could Mean for Generative AI

The musician Prince, a champion (some would say crusader) of intellectual property rights [1] found himself yet again at the heart of a copyright dispute—this time from the afterlife! And I am sure he would be, as many livings artists likely will be, pleased to know that the result of this dispute will likely present new challenges to the revolutionary (and controversial) creations of artificial intelligence.


Last Thursday, the Supreme Court of the United States decided Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith.[2] In a 7-to-2 vote, the Court held that the purpose and character of a Prince portrait created by pop artist Andy Warhol, derived from Prince photograph taken by photographer Lynn Goldsmith, did not favor a finding of fair use.[3] In reaching this decision, the Court clarified its position on the concept of “transformative” use—a phrase that has been used by many as a fair use “silver bullet” to defend against copyright infringement claims in the United States for decades. The Warhol opinion, which can be read in full here, could reconstruct our understanding of what constitutes fair use for years to come.


And what fitting years they will be, as we collectively face the meteoric and disruptive rise—and copyright-complexity—of generative artificial intelligence (“AI”) like OpenAI’s ChatGPT, Stability AI’s Stable Diffusion, and Midjourney (to name a very select few). Creators, users of AI creators, and the legal counsel of both should heed this new Warhol decision in any copyright infringement dispute involving generative AI moving forward. An already complicated question of copyright legality just got harder.


Once Upon a Time in the 80s


In 1981, Lynn Goldsmith took the following photograph of Prince:

Goldsmith granted a one-time-use license to Vanity Fair to use her photograph in a magazine article covering the musician in 1984, and Vanity Fair subsequently commissioned Warhol to create the following purple silkscreen portrait of Prince based on Goldsmith’s work:

The purple silkscreen portrait was one of sixteen works by Warhol based on Goldsmith’s photograph, entitled the “Prince Series.”[6] Goldsmith received a $400 fee and a “source photograph” credit in the article.[7]


Why is a 2023 Supreme Court case covering a 1984 portrait made by a pop artist who long since passed in 1986? Because following Prince’s death in 2016, Condé Nast (Vanity Fair’s parent company) reached out to the Andy Warhol Foundation for the Visual Arts (“AWF”), the current copyright owner of the Prince Series, for a license to use the portrait again for a special commemorative edition of their magazine.[8] Upon learning of the other works in the Prince Series, they decided to license the following orange silkscreen portrait instead:

Goldsmith did not know about this 2016 license nor did she receive any new fee or source credit from it.[10] Goldsmith accordingly alleged copyright infringement by AWF, prompting AWF to file for a declaratory judgment that its use of the orange silkscreen portrait was either noninfringement or, alternatively, fair use of Goldsmith’s photograph.[11] In alleging a fair use defense, AWF threw around a word that has been used as a shield against copyright infringement claims for decades: “transformative.”[12]


(Transformative) Fair Use…as We Knew It


Fair use is a statutory defense against copyright infringement claims in which “the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.”[13] When determining whether an alleged infringer is fairly using the copyrighted work of another, federal courts weigh four factors:

(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.[14]

For purposes here, focus only on the first factor: the purpose and character of the alleged infringer’s use. This is the only factor the Supreme Court was asked to review on appeal in Warhol,[15] and it is where “transformative” use comes into play. In a 1994 Supreme Court case, Campbell v. Acuff-Rose Music (a case heavily cited in Warhol and most other fair use cases), hip hop group 2 Live Crew’s parody of Roy Orbison’s song, “Oh, Pretty Woman” was deemed fair use.[16] Heavily influenced by 1990 Harvard Law Review article written by Judge Pierre N. Level,[17] the Court interpreted the question of whether the purpose and character of the 2 Live Crew’s use of Orbison’s song supported a finding of fair use depended on how “transformative” the parody was from the original song.[18] In other words, “The central purpose of this investigation is to see . . . whether the new work . . . adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.”[19] The Court found that 2 Live Crew’s parody had “an obvious claim to transformative value . . . by shedding light on an earlier work, and, in the process, creating a new one.”[20]


This “transformative” interpretation of the first factor has been used by many over the years to successfully claim fair use in what would likely otherwise be found as copyright infringement. This strategy seems to have been most successful for one company who has found itself in several landmark copyright cases in recent memory: Google. In 2007, Google successfully claimed “transformative” fair use in a copyright infringement suit against Google Images because the images were put “in a different context such that [they are] transformed into a new creation.”[21] In 2015, Google prevailed in the same defense in a suit against Google Books because Google’s digital copying of print books was found to contain a “highly convincing transformative purpose, together with the absence of significant substitutive competition.”[22] In the 2021 Supreme Court case, Google LLC v. Oracle America, Inc. (another case repeatedly cited in Warhol), Google prevailed again under a “transformative” fair use defense when it copied over 10,000 lines of code from Oracle in building the Android Operating System because Google’s copying “seeks to create new products” and “offers programmers a highly creative and innovative tool.”[23] And even though Google repeatedly copied others’ works in their entireties, its uses were nonetheless found fair because the entire copying of the originals were deemed “necessary.”[24]


Case after case, win after win for Google, it has seemed that, so long as an alleged infringer of a copyrighted work could show that their use “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message,” then they had a fair use defense in the bag. I claimed as much with respect to generative AI at a CBIC Tech Talk in March.[25] If Google has repeatedly succeeded in wholly copying others’ works by merely depicting them through new mediums (as it does with Google Images or Google Books), I predicted that generative AIs scraping numerous copyrighted works, “learning” from them, and synthesizing them into separate, unique creations would surely be defensible under fair use.


Then the Supreme Court issued the Warhol opinion.


(Transformative) Fair Use…as of Now


The Supreme Court held that the purpose and character of Warhol’s orange silkscreen portrait did not favor a finding of fair use.[26] Delivering the opinion of the Court, Justice Sotomayor conceded that Warhol’s work was “transformative,” but went to explain how that does not necessitate a finding of fair use.[27] “Whether a use . . . has a further purpose or different character,” the Justice wrote, “is a matter of degree. Most copying has some further purpose, in the sense that copying is socially useful ex post.”[28] Accordingly, it is not enough that an alleged infringer’s use is transformative; it must be sufficiently transformative to favor a finding of fair use.[29]


The Copyright Act supports this ruling. One of the several exclusive rights a copyright owner has in a work—along with the right to reproduce, distribute, and publicly display the work—is “to prepare derivative works based upon the copyrighted work.”[30] The Copyright Act defines a “derivative work” as “a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.”[31] In other words, transformation necessitates a derivative work (over which the copyright owner of the underlying work has exclusive rights), but a derivative work can be so transformative that it favors a finding of fair use. To construe fair use otherwise would be to undercut the original copyright owner’s rights in derivative works:

[A]n overbroad concept of transformative use, one that includes any further purpose, or any different character, would narrow the copyright owner’s exclusive right to create derivative works. To preserve that right, the degree of transformation required to make “transformative” use of an original must go beyond that required to qualify as a derivative.[32]

The Court found that the purpose of the Warhol portrait was substantially the same as that of the Goldsmith photograph: both were used in magazines covering Prince.[33] This substantial similarity in purpose, in addition to that purpose being commercial in nature, led the Court to hold that the first factor did not favor a finding of fair use in this case.[34]


Justice Kagan’s Scathing Dissent


Justice Kagan, with whom Chief Justice Roberts joined, delivered a dissenting opinion.[35] She believed the Court overstated the importance of the fact that the Warhol portrait and Goldsmith photograph were both licensed to magazines and, in doing so, “[left] our first-factor inquiry in shambles.”[36] By placing the focus on the similarity of how the two works were used, Justice Kagan explained, the Court shifted the focus away from the new expression, meaning, or message Warhol added to the Goldsmith photograph.[37] She cited expert testimony from the case explaining how the messages between the two works “could not have been more different”:

Goldsmith’s focus—seen in what one expert called the “corporeality and luminosity” of her depiction—was on Prince’s “unique human identity.” Warhol’s focus was more nearly the opposite. His subject was “not the private person but the public image.” The artist’s “flattened, cropped, exotically colored, and unnatural depiction of Prince’s disembodied head” sought to “communicate a message about the impact of celebrity” in contemporary life. . . . He manifested, in short, the dehumanizing culture of celebrity in America.[38]

Justice Kagan warned that the Court’s “doctrinal shift ill serves copyright’s core purpose . . . hampers creative progress and undermines creative freedom.”[39] She pointed out how these were the very principles that led them to a finding of fair use in the 2021 Google case, in which the Court even used Warhol’s paintings of Campbell’s soup cans as an example of transformative fair use:

The majority claims not to be embarrassed by this embarrassing fact because the specific reference was to [Warhol’s] Soup Cans, rather than his celebrity images. But drawing a distinction between a “commentary on consumerism”—which is how the majority describes his soup canvases—and a commentary on celebrity culture, i.e., the turning of people into consumption items, is slicing the baloney pretty thin.[40]

Justice Kagan admonished the Court for describing Warhol “as though [he was] an Instagram filter.”[41] “Worse still,” Justice Kagan continued, “the majority maintains that [Warhol’s] contributions, even if significant, just would not matter. All of Warhol’s artistry and commentary is negated by one thing: [AWF] licensed his portrait to a magazine and Goldsmith sometimes licensed her photos to magazines too.”[42] This again contradicts the 2021 Google case, in which the Court held that Google’s use of Oracle’s code was fair even though they had the same purpose of marketing software platforms.[43] “In declining to acknowledge the importance of transformative copying,” Justice Kagan wrote, “the Court today, for the first time, turns its back on how creativity works.”[44]


Did the Supreme Court Get It Right?


It is difficult to choose a side between Justices Sotomayor and Kagan’s opinions here. On one hand, Justice Sotomayor did seem overly dismissive of Warhol’s creative contributions to the Goldsmith photograph in creating the Prince Series. On the other hand, Justice Kagan seemed to dive too far into art critique in evaluating the new expression, meaning, and message of Warhol’s portrait, which the Court should not do. In any event, I believe both Justices got a key point exactly right.


Justice Kagan was right that the majority conflated the first fair use factor with the fourth. Recall that the first fair use factor is “the purpose and character of the use” while the fourth factor is “the effect of the use upon the potential market for or value of the copyrighted work.”[45] The fact that both the Warhol portrait and Goldsmith photograph were licensed to magazines is relevant to the fourth factor, not the first. In a concurring opinion, Justice Gorsuch, with whom Justice Jackson joined, tried to explain through a close reading of the Copyright Act’s text that first factor “trains our attention on the particular use under challenge.”[46] He does so by emphasizing that first factor “instructs courts to focus on ‘the purpose and character of the use.’”[47] That use, to Justice Sotomayor and Justice Gorsuch, is the licensing of the work to a magazine:

[T]he Court’s decision seems to me exactly right. Does Mr. Warhol’s image seek to depict Prince as a “larger-than-life” icon while Ms. Goldsmith’s photograph attempts to cast him in a more “vulnerable” light? Or are the artistic purposes latent in the two images and their aesthetic character actually more similar than that? Happily, the law does not require judges to tangle with questions so far beyond our competence. Instead, the first fair-use factor requires courts to assess only whether the purpose and character of the challenged use is the same as a protected use. And here, the undisputed facts reveal that [AWF] sought to use its image as a commercial substitute for Ms. Goldsmith’s photograph.[48]

However, the Court is misunderstanding the application of the word “use” in the first factor. The inquiry is not focused on the alleged infringer’s use of the secondary work (i.e., its copying, distribution, public display, etc.); the inquiry is focused on the alleged infringer’s use of the underlying work in creating the secondary work. In other words, the focus is not on what AWF did with Warhol’s portrait, but with what Warhol did with Goldsmith’s photograph in creating Warhol’s portrait, and if the use was fairly used by Warhol to comment, criticize, or serve some other transformative purpose. Take the Campbell case as an example.[49] Under the majority’s interpretation of the first factor, the focus should have been on the fact that both 2 Live Crew and Roy Orbison both sold songs. Instead, the Campbell Court’s focus for the first factor was correctly on how 2 Live Crew used Orbison’s song in creating its parody.[50] A comparison of the market uses of the original work and secondary work is of course relevant to a fair use analysis—but it belongs in the fourth factor, not the first. On this, Justice Kagan was right to criticize the Court.


On the other hand, Justice Sotomayor was right that “transformative” use is not, and should not, be dispositive of fair use. As she correctly pointed out, doing so would defeat the purpose of granting copyright owners exclusive rights in derivative works. Everything Justice Kagan explained in her dissent regarding the differences in expression, meaning, and message between the Warhol portrait and Goldsmith photograph have merit. All they establish for certain, however, is that the Warhol portrait is a derivative work of the Goldsmith photograph. Whether the right to produce that derivative work should be exclusive to Goldsmith per her underlying copyright, or the derivative work is so transformative from Goldsmith’s original work that Warhol’s use should be considered fair use, is a different question…one to which I personally do not have a definitive answer!


What Could This All Mean for Generative AI?


Regardless of how anyone feels about whether the Warhol portrait was fair use of the Goldsmith photograph, Justice Sotomayor’s stance won the day. Moving forward, transformative use is not as much of the fair use safety net as previously thought—especially not how it has been in Google’s “glory days” (one has to think whether the 2021 Google case would have been decided differently had the Warhol case been decided by the Court first). Arguably ironic to Justice Kagan’s claims that the Warhol decision “turns its back” on creativity, however, this “transformation” of our understanding of transformative use’s role in fair use analysis will likely strengthen artists’ claims of copyright infringement in protecting their works against generative AI. Conversely, AI companies may have a harder time prevailing on a fair use defense. Whereas the process of generative AI scraping and synthesizing copyrighted works into its own creations seemed almost certainly defensible under fair use, now the process may only get AI companies as far as having the AI’s outputs deemed derivative works—exclusive to the copyright owners of the works used to teach the AI.


We potentially will not know for certain until we see the inevitable litigation on these issues (some of which have already begun[51]) run their course, potentially back up to the Supreme Court. The one certainty for now? This is just the beginning of the AI intellectual property battle.


_________________________________________________________________________________________


[1] See, e.g., Pickett v. Prince, 207 F.3d 402 (7th Cir. 2000); Lenz v. Universal Music Corp., 815 F.3d 1145 (9th Cir. 2016).


[2] 598 U.S. __ (2023).


[3] Id. at __ (slip op., at 13).


[4] Id. at __ (slip op., at 4).


[5] Id. at __ (slip op., at 5).


[6] Id. at __ (slip op., at 4–5).


[7] Id. at __ (slip op., at 4).


[8] Id. at __ (slip op., at 5).


[9] Id. at __ (slip op., at 6).


[10] Id.


[11] Id. at __ (slip op., at 9).


[12] Id.


[13] 17 U.S.C. § 107.


[14] Id.


[15] Id. at __ (slip op., at 12).


[16] 510 U.S. 569, 572 (1994).


[17] Pierre N. Leval, Toward a Fair Use Standard, 103 HARV. L. REV. 1105 (1990).


[18] Campbell, 510 U.S. at 579.


[19] Id. (emphasis added).


[20] Id.


[21] Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007).


[22] Authors Guild v. Google, Inc., 804 F.3d 202, 219 (2d Cir. 2015).


[23] 593 U.S. __, __ (2021) (slip op., at 26).


[24] Perfect 10, 508 F.3d at 1167; Authors Guild, 804 F.3d at 221; Google, 593 U.S. at __ (slip op., at 30).


[25] Christopher J. Sullivan, IP of AI: What to Know Before Deploying Bots for Your Biz, Charlottesville Business Innovation Council Tech Talk (Mar. 1, 2023), https://www.youtube.com/watch?v=z_p-xPsS2sQ.


[26] Andy Warhol Foundation for Visual Arts, Inc. v. Goldsmith, 598 U.S. __, __ (2023) (slip op., at 13).


[27] Id. at __ (slip op., at 16).


[28] Id. at __ (slip op., at 15–16).


[29] Id.


[30] 17 U.S.C. § 106(2).


[31] Id. § 101 (emphasis added).


[32] Warhol Foundation, 598 U.S. at __ (slip op., at 16) (emphasis added).


[33] Id. at __ (slip op., at 22–23).


[34] Id. at __ (slip op., at 25).


[35] Warhol Foundation, 598 U.S. at __ (Kagan, J., dissenting).


[36] Id. at __ (slip op., at 2) (Kagan, J., dissenting).


[37] Id. at __ (slip op., at 2–3) (Kagan, J., dissenting).


[38] Id. at __ (slip op., at 9–10) (Kagan, J., dissenting).


[39] Id. at __ (slip op., at 3–4) (Kagan, J., dissenting).


[40] Id. at __ (slip op., at 15) (Kagan, J., dissenting).


[41] Id. at __ (slip op., at 18) (Kagan, J., dissenting).


[42] Id.


[43] Id. at __ (slip op., at 23) (Kagan, J., dissenting) (citing Google LLC v. Oracle America, Inc., 593 U.S. __, __ (2021) (slip op., at 25, 27)).


[44] Id. at __ (slip op., at 35) (Kagan, J., dissenting).


[45] 17 U.S.C. § 107.


[46] Warhol Foundation, 598 U.S. at __ (slip op., at 2) (Gorsuch, J., concurring).


[47] Id. (emphasis in original) (citing § 107).


[48] Id. at __ (slip op., at 4) (Gorsuch, J., concurring).


[49] Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994).


[50] Id. at 572.


[51] See., e.g., Andersen v. Stability AI Ltd., No. 23-201 (N.D. Cal. filed Jan. 13, 2023).

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