Ty, Incorporated v. Publications Int'l ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-3304
Ty, Inc.,
Plaintiff-Appellee,
v.
Publications International Ltd.,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 99 C 5565--James B. Zagel, Judge.
Argued April 5, 2002--Decided May 30, 2002
Before Flaum, Chief Judge, and Posner and
Rovner, Circuit Judges.
Posner, Circuit Judge. Ty is the
manufacturer of Beanie Babies. These
well-known beanbag stuffed animals are
copyrightable as "sculptural works," 17
U.S.C. sec.sec. 101, 102(a)(5); Ty, Inc.
v. GMA Accessories, Inc., 132 F.3d 1167,
1169 (7th Cir. 1997), and are copyrighted
by Ty, which brought this suit for
copyright and trademark infringement
against Publications International, Ltd.
(PIL), publisher of a series of books,
with titles such as For the Love of
Beanie Babies and Beanie Babies
Collector’s Guide, that contain
photographs of Beanie Babies. PIL
concedes that photographs of Beanie
Babies are derivative works, which, being
copies of copyrighted works, can be
produced only under license from Ty--and
PIL has no license. PIL’s defense to the
charge of copyright infringement is the
doctrine of fair use. On Ty’s motion for
summary judgment, the district court
rejected the defense, granted the motion,
and issued a permanent injunction against
PIL’s selling any of its Beanie Babies
books. It also awarded Ty PIL’s profits
from the sale of those books, $1.36
million, plus more than $200,000 in
prejudgment interest.
The trademark claim remains in the
district court, which denied summary
judgment on that claim, but the court en
tered final judgment on the copyright
claim under Fed. R. Civ. P. 54(b) to
permit an immediate appeal. However, Rule
54(b) authorizes the district court to
enter a final judgment on a separate
claim only if that claim is separate from
the claim or claims remaining for
decision in the district court--separate
not in the sense of arising under a
different statute or legal doctrine, such
as the trademark statute versus the
copyright statute, but in the sense of
involving different facts. Continental
Casualty Co. v. Anderson Excavating &
Wrecking Co., 189 F.3d 512, 516 (7th Cir.
1999); Lawyers Title Ins. Corp. v.
Dearborn Title Corp., 118 F.3d 1157,
1162-63 (7th Cir. 1997); NAACP v.
American Family Mutual Ins. Co., 978 F.2d
287, 292 (7th Cir. 1992); see Curtiss-
Wright Corp. v. General Electric Co., 446
U.S. 1, 8 (1980); Advanced Magnetics,
Inc. v. Bayfront Partners, Inc., 106 F.3d
11, 21-22 (2d Cir. 1997); Maldonado-Denis
v. Castillo-Rodriguez, 23 F.3d 576, 580
(1st Cir. 1994). Otherwise the appellate
court would have to go over the same
ground when the judgment terminating the
entire case was appealed.
At first glance the factual overlap
might seem complete in this case, since
the identical images, PIL’s photographs
of Beanie Babies, are claimed to infringe
both Ty’s copyrights and its trademarks.
But the only facts before us on this
appeal, the facts bearing on PIL’s
defense of fair use, are unlikely to be
at issue in the trademark phase of the
case. Moreover, although the district
court issued a permanent rather than a
preliminary injunction, that injunction
is appealable immediately, irrespective
of Rule 54(b), by virtue of the provision
of the Judicial Code that permits
"interlocutory orders . . . granting . .
. injunctions" to be appealed. 28 U.S.C.
sec. 1292(a)(1). Although this provision
is ordinarily used to permit the
immediate appeal of preliminary
(temporary) injunctions, it is not so
limited as a matter either of statutory
language or statutory purpose. United
States v. Hansen, 795 F.2d 35, 38 (7th
Cir. 1986); Prohosky v. Prudential Ins.
Co., 767 F.2d 387, 391 n. 4 (7th Cir.
1985); Parks v. Pavkovic, 753 F.2d 1397,
1402-03 (7th Cir. 1985); Fielder v.
Credit Acceptance Corp., 188 F.3d 1031,
1033 (8th Cir. 1999); Warren Publishing,
Inc. v. Microdos Data Corp., 115 F.3d
1509, 1511 and n. 1 (11th Cir. 1997) (en
banc); 16 Charles Alan Wright et al.,
Federal Practice & Procedure, sec. 3924,
pp. 149-53 (2d ed. 1996). An order is
interlocutory when it does not wind up
the litigation in the court issuing the
order, and that is the character of the
permanent injunction that the district
court issued in this case. And while one
reason for permitting the immediate
appeal of a preliminary injunction is
that such an injunction is entered after
a summary proceeding, increasing the risk
of error, that turns out to be the
character of the permanent injunction in
this case as well: it was issued in
response to a motion for summary
judgment, and not after a trial.
The main reason for allowing the
interlocutory appeal of an injunction,
moreover, is that an injunction is likely
to inflict irreparable harm on the
defendant, that is, harm that a reversal
will not cure. The harm will be prolonged
and thus increased if the defendant must
await the completion of further
proceedings in the district court before
challenging the injunction in the court
of appeals. This is true whether the
injunction is permanent or temporary--in
fact it is truer for the former. The
purpose of an injunction bond is to
compensate the defendant, in the event he
prevails on the merits, for the harm that
an injunction entered before the final
decision caused him, and so it is
required only for a temporary restraining
order or a preliminary injunction, Fed.
R. Civ. P. 65(c), not for a permanent
injunction.
So we have jurisdiction by virtue both
of Rule 54(b) and section 1292(a)(1), and
thus can proceed to the merits, where the
only question is whether PIL is entitled
to a trial on its defense of fair use.
"Fair use is a mixed question of law and
fact," Harper & Row Publishers, Inc. v.
Nation Enterprises, 471 U.S. 539, 560
(1985), which means that it "may be
resolved on summary judgment if a
reasonable trier of fact could reach only
one conclusion"--but not otherwise.
Narell v. Freeman, 872 F.2d 907, 910 (9th
Cir. 1989); see also Association of
American Medical Colleges v. Cuomo, 928
F.2d 519, 524 (2d Cir. 1991).
The defense of fair use, originally
judge-made, now codified, plays an
essential role in copyright law. Without
it, any copying of copyrighted material
would be a copyright infringement. A book
reviewer could not quote from the book he
was reviewing without a license from the
publisher. Quite apart from the
impairment of freedom of expression that
would result from giving a copyright
holder control over public criticism of
his work, to deem such quotation an
infringement would greatly reduce the
credibility of book reviews, to the
detriment of copyright owners as a group,
though not to the owners of copyright on
the worst books. Book reviews would no
longer serve the reading public as a
useful guide to which books to buy. Book
reviews that quote from ("copy") the
books being reviewed increase the demand
for copyrighted works; to deem such
copying infringement would therefore be
perverse, and so the fair-use doctrine
permits such copying. Desnick v. American
Broadcasting Companies, Inc., 44 F.3d
1345, 1351 (7th Cir. 1995) (dictum);
William M. Landes, "Copyright, Borrowed
Images, and Appropriation Art: An
Economic Approach," 9 Geo. Mason L. Rev.
1, 10 (2000); Lawrence Lessig, "The Law
of the Horse: What Cyberlaw Might Teach,"
113 Harv. L. Rev. 501, 528 (1999). On the
other hand, were a book reviewer to quote
the entire book in his review, or so much
of the book as to make the review a
substitute for the book itself, he would
be cutting into the publisher’s market,
and the defense of fair use would fail.
Harper & Row, Publishers, Inc. v. Nation
Enterprises, 723 F.2d 195, 215 (2d Cir.
1983) (dissenting opinion), rev’d, 471
U.S. 539 (1985); see Harper & Row,
Publishers, Inc. v. Nation Enterprises,
471 U.S. 539, 562 (1985); Worldwide
Church of God v. Philadelphia Church of
God, Inc., 227 F.3d 1110, 1118 (9th Cir.
2000); Consumers Union of United States,
Inc. v. General Signal Corp., 724 F.2d
1044, 1051 (2d Cir. 1983).
Generalizing from this example in
economic terminology that has become
orthodox in fair-use case law, we may say
that copying that is complementary to the
copyrighted work (in the sense that nails
are complements of hammers) is fair use,
but copying that is a substitute for the
copyrighted work (in the sense that nails
are substitutes for pegs or screws), or
for derivative works from the copyrighted
work, see 4 Melville B. Nimmer & David
Nimmer, Nimmer on Copyright sec.
13.05[B][1], p. 13-193 (2002), is not
fair use. On Davis v. The Gap, Inc., 246
F.3d 152, 175-76 (2d Cir. 2001); Suntrust
Bank v. Houghton Mifflin Co., 268 F.3d
1257, 1277 (11th Cir. 2001) (concurring
opinion); Wendy J. Gordon, "Fair Use as
Market Failure: A Structural and Economic
Analysis of the Betamax Case and Its
Predecessors," 82 Colum. L. Rev. 1600,
1643 n. 237 (1982); see Consumers Union
of United States, Inc. v. General Signal
Corp., supra, 724 F.2d at 1051. If the
price of nails fell, the demand for
hammers would rise but the demand for
pegs would fall. The hammer manufacturer
wants there to be an abundant supply of
cheap nails, and likewise publishers want
their books reviewed and wouldn’t want
reviews inhibited and degraded by a rule
requiring the reviewer to obtain a
copyright license from the publisher if
he wanted to quote from the book. So, in
the absence of a fair-use doctrine, most
publishers would disclaim control over
the contents of reviews. The doctrine
makes such disclaimers unnecessary. It
thus economizes on transaction costs.
The distinction between complementary
and substitutional copying (sometimes--
though as it seems to us, confusingly--
said to be between "transformative" and
"superseding" copies, see, e.g., Campbell
v. Acuff-Rose Music, Inc., 510 U.S. 569,
579 (1994)) is illustrated not only by
the difference between quotations from a
book in a book review and the book
itself, Marion B. Stewart, "Calculating
Economic Damages in Intellectual Property
Disputes: The Role of Market Definition,"
77 J. Patent & Trademark Office Society
321, 332 (1995), but also by the
difference between parody (fair use) and
burlesque (often not fair use). A parody,
which is a form of criticism (good-
natured or otherwise), is not intended as
a substitute for the work parodied. But
it must quote enough of that work to make
the parody recognizable as such, and that
amount of quotation is deemed fair use.
Campbell v. Acuff-Rose Music, Inc.,
supra, 510 U.S. at 579, 580-81 and n. 14,
588; Suntrust Bank v. Houghton Mifflin
Co., supra, 268 F.3d at 1271; Leibovitz
v. Paramount Pictures Corp., 137 F.3d
109, 114 (2d Cir. 1998); Dr. Seuss
Enterprises, L.P. v. Penguin Books USA,
Inc., 109 F.3d 1394, 1400 (9th Cir.
1997); 4 Nimmer & Nimmer, supra, sec.
13.05[C], pp. 13-203 to 13-218. A
burlesque, however, is often just a
humorous substitute for the original and
so cuts into the demand for it: one might
choose to see Abbott and Costello Meet
Frankenstein or Young Frankenstein rather
than Frankenstein, or Love at First Bite
rather than Dracula, or even Clueless
rather than Emma. Burlesques of that
character, catering to the humor-loving
segment of the original’s market, are not
fair use. Benny v. Loew’s Inc., 239 F.2d
532, 536-37 (9th Cir. 1956), aff’d by an
equally divided Court under the name
Columbia Broadcasting System, Inc. v.
Loew’s, Inc., 356 U.S. 43 (1958) (per
curiam); see 4 Nimmer & Nimmer, supra,
sec. 13.05[B][1], pp. 13-194 to 13-195,
sec. 13.05[C]; cf. Campbell v. Acuff-Rose
Music, Inc., supra, 510 U.S. at 580-81 &
n. 14, 591. The distinction is implicit
in the proposition, affirmed in all the
cases we have cited, that the parodist
must not take more from the original than
is necessary to conjure it up and thus
make clear to the audience that his work
is indeed a parody. If he takes much
more, he may begin to attract the
audience away from the work parodied, not
by convincing them that the work is no
good (for that is not a substitution
effect) but by providing a substitute for
it.
Book reviews and parodies are merely
examples of types of work that quote or
otherwise copy from copyrighted works yet
constitute fair use because they are
complements of (though sometimes negative
complements, as in the case of a
devastating book review) rather than
substitutes for the copyrighted original.
The commonest type is simply a quotation
from a copyrighted work in a book or
article on the same or a related subject.
The complementary effect may be quite
weak, but the quotation is unlikely to
reduce the demand for the copyrighted
work; nor could the copyright owner
command a license fee commensurate with
the costs of transacting with the copier.
Such copying is therefore fair use.
Were control of derivative works not
part of a copyright owner’s bundle of
rights, it would be clear that PIL’s
books fell on the complement side of the
divide and so were sheltered by the fair-
use defense. A photograph of a Beanie
Baby is not a substitute for a Beanie
Baby. No one who wants a Beanie Baby,
whether a young child who wants to play
with it or an adult (or older child) who
wants to collect Beanie Babies, would be
tempted to substitute a photograph. But
remember that photographs of Beanie
Babies are conceded to be derivative
works, for which there may be a separate
demand that Ty may one day seek to
exploit, and so someone who without a
license from Ty sold photographs of
Beanie Babies would be an infringer of
Ty’s sculpture copyrights. The
complication here is that the photographs
are embedded in text, in much the same
way that quotations from a book are
embedded in a review of the book. Ty
regards the text that surrounds the
photographs in PIL’s Beanie Baby books as
incidental; implicitly it compares the
case to one in which a book reviewer
quotes the whole book in his review. Or
to a case in which a purveyor of
pornographic pictures pastes a copy of
the Declaration of Independence on the
back of each picture and argues that
judged as a whole his product has
redeeming social value. United States v.
A Motion Picture Film Entitled "I Am
Curious-Yellow," 404 F.2d 196, 201 (2d
Cir. 1968) (Friendly, J., concurring);
see Valentine v. Chrestensen, 316 U.S. 52(1942). PIL argues, to the contrary, that
the photographs are indispensable to the
creation of a collectors’ guide to Beanie
Babies; and, as we’ll see shortly,
collectors’ guides are not derivative
works.
The proper characterization of PIL’s
Beanie Baby books is the kind of fact-
laden issue appropriate for summary
judgment only in extreme cases, which
this case is not--in part because of
differences among the books that the dis
trict court found infringed Ty’s
copyright. At one end of the spectrum is
For the Love of Beanie Babies. This
large-print book with hard shiny covers
seems directed at a child audience. All
the different Beanie Babies, more than
150 of them, are pictured. Each picture
is accompanied by a brief commentary.
Some of the commentary seems aimed
exclusively at a child (or infantile
adult) audience, such as the commentary
on Snip the Siamese Cat: "That darn cat
has nerve! Just like the real thing, Ty’s
Siamese has plenty of attitude. The
champagne-colored cat with blue-ringed
black eyes and chocolate-covered points
is a beautiful specimen of the Far
Eastern breed. And she knows it!
Stretched out on all fours, this finicky
feline is the only purebred in Ty’s
cathouse. This pretty kitty is definitely
the cat’s meow." The commentary seems
distinctly secondary to the photograph.
An even clearer case is a two-page spread
in For the Love of Beanie Babies entitled
"Kitty Corner," which we reproduce
(without Ty’s permission!--a good example
of the fair-use doctrine in action) at
the end of this opinion. The text is
childish and pretty clearly secondary to
the more than full-page photograph of
feline Beanie Babies. Some of the
commentary on photographs in For the Love
of Beanie Babies does contain information
relevant to collectors, such as "mint-
condition Allys with older tags are very
difficult to find. Retired." ("Retired"
means no longer being manufactured.) But
For the Love of Beanie Babies might well
be thought essentially just a collection
of photographs of Beanie Babies, and
photographs of Beanie Babies are
derivative works from the copyrighted
Beanie Babies themselves.
At the opposite extreme is PIL’s Beanie
Babies Collector’s Guide. This is a small
paperback book with small print, clearly
oriented toward adult purchasers--indeed,
as the title indicates, toward
collectors. Each page contains, besides a
photograph of a Beanie Baby, the release
date, the retired date, the estimated
value of the Beanie Baby, and other
information relevant to a collector, such
as that "Spooky is the only Beanie ever
to have carried his designer’s name," or
that "Prance should be a member of the
Beanie line for some time, so don’t panic
and pay high secondary-market prices for
her just because she’s fairly new."
Some of the text is quite critical, for
example accusing Ty of frequent trademark
infringements. Ty doesn’t like criticism,
and so the copyright licenses that it
grants to those publishers whom it is
willing to allow to publish Beanie Baby
collectors’ guides reserve to it the
right to veto any text in the publishers’
guides. It also forbids its licensees to
reveal that they are licensees of Ty. Its
standard licensing agreement requires the
licensee to print on the title page and
back cover of its publication the
following misleading statement: "This
publication is not sponsored or endorsed
by, or otherwise affiliated with Ty Inc.
All Copyrights and Trademarks of Ty Inc.
are used by permission. All rights
reserved." Notice the analogy to a
publisher’s attempting to use licensing
to prevent critical reviews of its books-
-an attempt that the doctrine of fair use
blocks. See Suntrust Bank v. Houghton
Mifflin Co., supra, 268 F.3d at 1277(concurring opinion). We need not
consider whether such a misleading
statement might constitute copyright
misuse, endangering Ty’s copyrights. See,
e.g., A & M Records, Inc. v. Napster,
Inc., 239 F.3d 1004, 1026-27 (9th Cir.
2001): Practice Management Information
Corp. v. American Medical Association,
121 F.3d 516, 520 (1997), amended, 133
F.3d 1140 (9th Cir. 1998); Lasercomb
America, Inc. v. Reynolds, 911 F.2d 970,
976 (4th Cir. 1990).
But we do need to explain the oddity of
there being collectors’ guides for a line
of children’s toys; otherwise it might
seem clear that the Beanie Babies
Collector’s Guide was a device for
circumventing Ty’s lawful monopoly of
derivative works. As a marketing gimmick,
Ty deliberately creates a shortage in
each Beanie Baby by selling it at a very
low price and not producing enough copies
to clear the market at that price. As a
result, a secondary market is created,
just like the secondary market in works
of art. The secondary market gives
widespread publicity to Beanie Babies,
and the shortage that creates the
secondary market stampedes children into
nagging their parents to buy them the
latest Beanie Babies, lest they be
humiliated by not possessing the Beanie
Babies that their peers possess. Ty, Inc.
v. GMA Accessories, Inc., supra, 132 F.3d
at 1171, 1173. The appeal is to the
competitive conformity of children--but
also to the mentality of collectors.
When Beanie Babies Collector’s Guide was
published in 1998, some Beanie Babies
were selling in the secondary market for
thousands of dollars, while others were
selling for little more than their
original purchase price. The range was
vast, creating a demand for collectors’
guides. Ty acknowledges as it must that a
collectors’ guide to a series of
copyrighted works is no more a derivative
work than a book review is. We cannot
find a case on the point but the
Copyright Act is clear. It 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." 17
U.S.C. sec. 101. A derivative work thus
must either be in one of the forms named
or be "recast, transformed, or adapted."
Lee v. A.R.T. Co., 125 F.3d 580, 582 (7th
Cir. 1997). The textual portions of a
collectors’ guide to copyrighted works
are not among the examples of derivative
works listed in the statute, and guides
don’t recast, transform, or adapt the
things to which they are guides. A guide
to Parisian restaurants is not a
recasting, transforming, or adapting of
Parisian restaurants. Indeed, a
collectors’ guide is very much like a
book review, which is a guide to a book
and which no one supposes is a derivative
work. Both the book review and the
collectors’ guide are critical and
evaluative as well as purely
informational; and ownership of a
copyright does not confer a legal right
to control public evaluation of the
copyrighted work.
Ty’s concession that a Beanie Babies
collectors’ guide is not a derivative
work narrows the issue presented by PIL’s
appeal nicely (at least as to those books
that are plausibly regarded as
collectors’ guides) to whether PIL copied
more than it had to in order to produce
a marketable collectors’ guide. Ty points
out that PIL’s books copied (more
precisely, made photographic copies of)
the entire line of Beanie Babies, just
like the book reviewer who copies the
entire book. But the cases are clear that
a complete copy is not per se an unfair
use, see, e.g., Sony Corp. v. Universal
City Studios, Inc., 464 U.S. 417, 447-50
(1984); id. at 480 (dissenting opinion);
Worldwide Church of God v. Philadelphia
Church of God, Inc., supra, 227 F.3d at
1118, and the suggested analogy overlooks
the fact that a collectors’ guide, to
compete in the marketplace, has to be
comprehensive. Given that Ty can license
(in fact has licensed) the publication of
collectors’ guides that contain photos of
all the Beanie Babies, how could a
competitor forbidden to publish photos of
the complete line compete? And if it
couldn’t compete, the result would be to
deliver into Ty’s hands a monopoly of
Beanie Baby collectors’ guides even
though Ty acknowledges that such guides
are not derivative works and do not
become such by being licensed by it.
Castle Rock Entertainment, Inc. v. Carol
Publishing Group, Inc., 150 F.3d 132, 145
n. 11 (2d Cir. 1998) ("by developing or
licensing a market for parody, news
reporting, educational or other
transformative uses of its own creative
work, a copyright owner plainly cannot
prevent others from entering those fair
use markets"); see Sony Computer
Entertainment, Inc. v. Connectix Corp.,
203 F.3d 596, 607-08 (9th Cir. 2000);
Twin Peaks Productions, Inc. v.
Publications Int’l, Ltd., 996 F.2d 1366,
1377 (2d Cir. 1993) ("the author of ’Twin
Peaks’ cannot preserve for itself the
entire field of publishable works that
wish to cash in on the ’Twin Peaks’
phenomenon").
Granted, there is some question how, if
Beanie Babies collectors’ guides are
indeed a complement to Beanie Babies (and
they are), and Ty has a monopoly of
Beanie Babies (and it does), Ty can get a
second monopoly profit by taking over the
guides market. The higher the price it
charges for guides, the lower will be the
demand for such guides and hence for
collecting Beanie Babies and so the less
effective will Ty’s strategy of marketing
Beanie Babies as collectibles be. This is
the sort of question that has engendered
skepticism among economists about the
antitrust rule against tie-in agreements.
But there is an answer here: Ty wants to
suppress criticism of its product in
these guides.
Ty goes so far as to argue that PIL not
only cannot publish photos of all the
Beanie Babies but cannot publish color
photos of any of them, and perhaps cannot
publish black and white photos of any of
them or even sketches but must instead be
content with the name of the Beanie Baby
and a verbal description. Such a guide
would sink like a stone in the
marketplace no matter how clever and
informative its text, since Ty licenses
publishers to publish photos of all the
Beanie Babies in the licensees’
collectors’ guides. It would be like
trying to compete with a CD of
Beethoven’s Fifth Symphony by selling the
score.
We have thus far discussed the
application of the fair-use doctrine in
terms of the purpose of the doctrine
rather than its statutory definition,
which though extensive is not
illuminating. (More can be less, even in
law.) The statute provides that "the fair
use of a copyrighted work . . . for
purposes such as criticism, comment, news
reporting, teaching . . . scholarship or
research, is not an infringement of
copyright." 17 U.S.C. sec. 107. (Notice
that the purposes listed are illustrative
rather than comprehensive. Campbell v.
Acuff-Rose Music, Inc., supra, 510 U.S.
at 577-78.) In deciding whether a
particular use is fair, the "factors to
be considered shall include"--and notice
again that the listing is illustrative
rather than exhaustive; Congress
"intended that courts continue the common
law tradition of fair use adjudication"
and [section 107] "permits and requires
courts to avoid rigid application of the
copyright statute, when, on occasion, it
would stifle the very creativity which
that law is designed to foster," id. at
577--"(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." Factors (1) and (2)
are empty, except that (1) suggests a
preference for noncommercial educational
uses, picking up the reference earlier in
the statute to "teaching . . .
scholarship or research." Factor (3) is
inapplicable to Beanie Babies, each one
of which is copyrighted separately, so
that there can be no partial copying as a
matter of fact (no one, we imagine, wants
a photograph of part of a Beanie Baby).
Factor (4) at least glances at the
distinction we noted earlier between
substitute and complementary copying,
since the latter does not impair the
potential market or value of the
copyrighted work except insofar as it
criticizes the work, which is the
opposite of taking a free ride on its
value.
The important point is simply that, as
the Supreme Court made clear not only in
Campbell but also in Sony Corp. v.
Universal City Studios, supra, 464 U.S.
at 448-49 n. 31, the four factors are a
checklist of things to be considered
rather than a formula for decision; and
likewise the list of statutory purposes.
See also Castle Rock Entertainment, Inc.
v. Carol Publishing Group, Inc., supra,
150 F.3d at 141; Ringgold v. Black
Entertainment Televison, Inc., 126 F.3d
70, 78 and n. 9 (2d Cir. 1997). Because
the factors and purposes are not
exhaustive, Ty can get nowhere in
defending the judgment by arguing that
some or even all of them lean against the
defense of fair use. The question is
whether it would be unreasonable to
conclude, with reference to one or more
of the enjoined publications, such as the
Beanie Babies Collector’s Guide, that the
use of the photos is a fair use because
it is the only way to prepare a
collectors’ guide.
Ty relies primarily on two cases. Twin
Peaks Productions, Inc. v. Publications
International, Ltd., supra, involved a
book published by PIL concerning a
television series. The book included a
detailed recounting of the plot of the
first eight episodes: "every intricate
plot twist and element of character
development appear in the Book in the
same sequence as in the teleplays." 996
F.2d at 1373. The court held that the
book was basically an abridgment of the
script and that abridgments (despite
contrary, aged authority) are generally
not fair use. Id. at 1375-76. The plot
summaries were so extensive as to be
substitutes for rather than complements
of the copyrighted scripts.
The other case on which Ty principally
relies, Castle Rock Entertainment, Inc.
v. Carol Publishing Group, Inc., supra,
involved another television series,
Seinfeld, and another book, The Seinfeld
Aptitude Test, a collection of trivia
questions testing viewers’ knowledge of
obscure details of the series’ plot and
characters. There was evident
complementarity: people who bought the
book had to watch the show in order to
pick up the answers to the questions in
the book; no one would read the book in
lieu of watching the show. When the book
first appeared, the show’s producers
requested free copies and distributed
them as promotional material, 150 F.3d at
136; and the book’s blurb told readers to
"open this book to satisfy your between-
episode cravings." Id. The court
nevertheless held that the book wasn’t
insulated from copyright liability by the
doctrine of fair use. The holding seems
to rest in part, and very dubiously we
must say, on the court’s judgment that
the book was frivolous. Id. at 146:
"Undoubtedly, innumerable books could
’expose’ the ’nothingness’ or otherwise
comment upon, criticize, educate the
public about, or research Seinfeld and
contemporary television culture. The
[Seinfeld Aptitude Test], however, is not
such a book." But the fair-use doctrine
is not intended to set up the courts as
judges of the quality of expressive
works. See Campbell v. Acuff-Rose Music,
Inc., supra, 510 U.S. at 582-83. That
would be an unreasonable burden to place
on judges, as well as raising a First
Amendment question.
But there was more to the court’s
decision. The Seinfeld Aptitude Test may
have been a subterfuge for copying the
script of the television series--and the
script was a derivative work. The court
said that "each ’fact’ tested by The SAT
is in reality fictitious expression
created by Seinfeld’s authors. The SAT
does not quiz such true facts as the
identity of the actors in Seinfeld, the
number of days it takes to shoot an
episode, the biographies of the actors,
the location of the Seinfeld set, etc.
Rather, The SAT tests whether the reader
knows that the character Jerry places a
Pez dispenser on Elaine’s leg during a
piano recital, that Kramer enjoys going
to the airport because he’s hypnotized by
the baggage carousels, and that Jerry,
opining on how to identify a virgin, said
’It’s not like spotting a toupee.’"
Castle Rock Entertainment, Inc. v. Carol
Publishing Group, Inc., supra, 150 F.3d
at 139. A similar judgment might be
possible here with regard to For the Love
of Beanie Babies, which we described as
basically just a picture book; and the
pictures are derivative works from Ty’s
copyrighted soft sculptures. This raises
the question whether, while summary
judgment is plainly not warranted with
regard to all the books that the district
court found infringed Ty’s copyrights, it
might be warranted with regard to some of
them, specifically For the Love of Beanie
Babies. However, three reasons counsel
against this course. The first is that
the record actually contains not one but
three versions of For the Love of Beanie
Babies, and our earlier description was
of the one furthest removed from a
collectors’ guide; the others are closer.
Second, Ty is not asking us to consider
the appropriateness of partial summary
judgment. Third, and related to the
second point, the briefs do not analyze
the various books separately, making us
reluctant to rule separately on them. We
do not preclude consideration on remand
of the possibility of partial summary
judgment.
The Rule 54(b) judgment (including of
course the award of attorneys’ fees to
Ty) must, however, be reversed. For
guidance on remand, we add that the
district court also erred in refusing to
apportion PIL’s profits between those
attributable to the photos and those
attributable to the text. PIL’s Beanie
Baby books would have commanded lower
prices in the marketplace had they had no
text, and they would therefore have
generated lower profits as well unless,
as we doubt, the text is very costly to
create. All that Ty is entitled to if it
proves infringement on remand is the
profits attributable to the photos, 17
U.S.C. sec. 504(b), a smaller amount than
PIL’s actual profits, although PIL would
have the burden of proving how much
smaller. Id.; Harper & Row, Publishers,
Inc. v. Nation Enterprises, supra, 471
U.S. at 567; Sheldon v. Metro-Goldwyn
Pictures Corp., 309 U.S. 390, 402, 405-06
(1940); Business Trends Analysts, Inc. v.
Freedonia Group, Inc., 887 F.2d 399, 407
(2d Cir. 1989).
Reversed and Remanded.
"Kitty Korner" (from For the Love of Beanie
Babies)