Ty, Inc. v. Publications International Ltd.
2002 WL 1068020, 292 F.3d 512 (2002)
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Rule of Law:
The use of copyrighted images in a publication constitutes fair use if the publication is complementary to, rather than a substitute for, the copyrighted work. A collector's guide that uses photographs of an entire line of a collectible product may be considered a fair use if the photographs are indispensable to the guide's purpose and the guide does not supplant the market for the original work or its licensed derivatives.
Facts:
- Ty, Inc. manufactures and holds the copyrights for its line of stuffed animals known as Beanie Babies.
- Ty's marketing strategy involves creating artificial scarcity for each Beanie Baby, which has generated a significant secondary market for collectors.
- The existence of this secondary market created a demand for collector's guides containing information such as release dates, retirement dates, and estimated values.
- Publications International, Ltd. (PIL), without a license from Ty, published a series of books about Beanie Babies, including titles such as 'For the Love of Beanie Babies' and 'Beanie Babies Collector’s Guide'.
- These books contained photographs of the copyrighted Beanie Babies, often depicting the entire product line.
- The content of PIL's books varied; the 'Collector’s Guide' was text-heavy with information for adult collectors, while 'For the Love of Beanie Babies' was a large-print, pictorial book seemingly aimed at children.
- Ty also licenses other publishers to create official collector's guides, but its licensing agreements reserve the right to veto text and require publishers to state misleadingly that their books are not affiliated with Ty.
Procedural Posture:
- Ty, Inc. sued Publications International, Ltd. (PIL) in U.S. District Court for copyright and trademark infringement.
- Ty moved for summary judgment on its copyright infringement claim.
- The district court granted Ty's motion for summary judgment, rejecting PIL's fair use defense.
- Following the ruling, the district court issued a permanent injunction against PIL and awarded Ty over $1.5 million in profits and prejudgment interest.
- The district court entered a final judgment on the copyright claim pursuant to Federal Rule of Civil Procedure 54(b), permitting an immediate appeal while the trademark claim remained unresolved.
- PIL (appellant) appealed the district court’s judgment to the U.S. Court of Appeals for the Seventh Circuit, with Ty (appellee) defending the lower court's decision.
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Issue:
Is a publisher entitled to a trial on its defense of fair use when it publishes photographs of copyrighted works as an essential part of a collector's guide?
Opinions:
Majority - Posner, Circuit Judge.
Yes, a publisher is entitled to a trial on its fair use defense in such circumstances. The court's analysis centers on the economic distinction between complementary and substitutional copying. A use is fair if it is complementary to the copyrighted work (e.g., a book review), but not if it is a substitute that usurps the market for the original work or its derivatives. A collector's guide is a complement to Beanie Babies, not a substitute, as no one would purchase the guide instead of the toy. The photographs are essential to the guide's function, as a text-only guide would be unmarketable. While photographs of the toys are derivative works, their inclusion in a textual guide for commentary and informational purposes must be evaluated under fair use. Denying fair use would improperly grant the copyright holder a monopoly over the separate market for guides (which are not derivative works) and allow it to suppress criticism. Because the character of PIL's various books presents a fact-laden issue as to whether they are true guides or mere picture books, summary judgment was inappropriate and a trial is required.
Analysis:
This decision significantly reinforces the economic rationale of the fair use doctrine by focusing on the distinction between complementary and substitutional uses. It establishes that copying an entire work, or series of works, can be a fair use if it is functionally necessary for a legitimate complementary purpose, such as creating a comprehensive collector's guide. The ruling limits a copyright holder's power to extend its monopoly into secondary markets for commentary and criticism, thereby protecting the public's ability to evaluate and discuss copyrighted works. This precedent is crucial for authors of guidebooks, critical reviews, and other commentary who must use images of the original work to effectively convey their message.
