Video Pipeline, Inc. v. Buena Vista Home Entertainment, Inc.

Majority - Ambro, Circuit Judge

Yes, the online display of self-created movie clip previews constitutes copyright infringement and is not protected by the fair use doctrine, nor do Disney's licensing agreements constitute copyright misuse, thereby warranting a preliminary injunction against infringement. The Third Circuit affirmed the preliminary injunction, finding that Disney demonstrated a likelihood of success on the merits of its copyright infringement claim and a likelihood of irreparable harm. The Court found that Video Pipeline's clip previews likely infringed Disney's exclusive rights under 17 U.S.C. §§ 106(4) and (5) to publicly perform and display copyrighted motion pictures and their individual images. In analyzing the fair use defense under 17 U.S.C. § 107, the Court considered the four statutory factors: 1. Purpose and Character of the Use: This factor weighed strongly against fair use. Video Pipeline's use was commercial, charging a fee for streaming. The Court found the clip previews lacked transformative quality, merely serving the same promotional and informational purpose as Disney's own derivative trailers without adding significant creative ingenuity, thus likely superseding the market objects of Disney's derivatives. 2. Nature of the Copyrighted Work: This factor weighed against fair use. Disney's movies and trailers are highly creative, fictional works, placing them at the core of copyright protection, which makes establishing fair use more difficult. The fact that the works were published did not diminish their creative nature. 3. Amount and Substantiality of the Portion Used: This factor weighed in favor of fair use. The clip previews were quantitatively small (approximately two minutes from 1.5-2 hour movies), comprised only of scenes from the first half, and were not designed to reveal the "heart" or crucial plot points of the movies. 4. Effect on Potential Market or Value: This factor weighed in Disney's favor. The Court recognized a substantial market and value for movie previews, considering their ability to attract internet users to websites, facilitate cross-marketing, and gather valuable marketing information. Video Pipeline's commercial streaming of clip previews was likely to serve as a market replacement for Disney's authorized trailers, potentially causing cognizable market harm by diverting users and licensing opportunities away from Disney. Overall, three of the four fair use factors weighed against Video Pipeline. Regarding the copyright misuse defense, the Court extended the patent misuse doctrine to copyright, acknowledging its potential application beyond traditional anti-competition contexts where a copyright holder attempts to disrupt copyright's goal of increasing creative expression for public good. However, it held the doctrine inapplicable here. Disney's licensing agreements, which prohibited licensees from displaying content derogatory to Disney or the entertainment industry, did not significantly interfere with copyright policy. The restrictions did not prevent criticism on other platforms, and the fair use doctrine would still protect legitimate critics. The Court reasoned that requiring Disney to license its works indiscriminately would likely decrease public access to its works online. Therefore, the District Court correctly presumed irreparable harm due to Disney's strong likelihood of success on the merits and the failure of Video Pipeline's asserted defenses.