A Colorado federal judge recently held that CleanFlicks and other companies violated motion picture studios’ rights to copy and distribute their movies by offering DVDs stripped of “objectionable” content for rent and sale. The court was not convinced that such use was protected by the “fair use” defense. However, the judge held that the “family friendly” movies did not violate the studios’ right to create derivative works.

The court addressed the factors considered in a fair use analysis:

  1. purpose and character of the use
  2. the nature of the copyrighted work
  3. the amount of the portion used; and
  4. the effect of the use on the potential market for or value of the copyrighted work.

In considering the first factor, the court exposed a paradox in both parties’ arguments. Defendants argue (and the studios deny) that their use is “transformative” for the purposes of this fair use factor, in that the purpose and character of their use are for criticism of the objectionable content of the movies. On the other hand, defendants deny (and studios argue) that their use is “transformative” and constitutes infringement as a derivative work. Forced to make an “all or nothing” decision, the court held that there was “nothing transformative” about the edited movies and thereby denied defendants’ fair use defense as well as plaintiffs’ derivative rights claim.

Additionally, the court explained that because defendants copied almost the entire movies and made non-transformative edits the second and third factors weighed against them.

As to the fourth factor, the court held that the defendants have an adverse effect on the market for the studios’ work despite the facts that: (1) defendants purchase one original DVD for every sale or rental DVD it creates, and (2) the studios do not yet sell edited versions of their movies directly to consumers. The court was not convinced by the “superficial appeal” of these arguments, but was more concerned with the “intrinsic value” of the right to control the content of the studios’ works. Judge Matsch asserts that it is “more than merely a matter of marketing, it is a question of what audience the copyright owner wants to reach.” In doing so, the court seems to interject a moral rights component into the fair use analysis.

Additionally, the court rejected the first sale doctrine as a defense to infringement. Since defendants used the original DVDs to make edits and create copies that are distributed to the public, the court held that the doctrine did not apply to this case.