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Fourth Circuit Issues a Bummer Fair Use Ruling–Philpot v. IJR

Larry Philpot is a repeat copyright plaintiff. We’ve blogged some of his cases before (1, 2), including the lower court ruling in this case.

In 2016, the defendant IJR published an article/listicle titled “15 Signs Your Daddy Was a Conservative.” One sign is listening to Ted Nugent. (I trust you know who Ted Nugent is, even if the Fourth Circuit panel did not). IJR illustrated the point with Philpot’s photo of Ted Nugent with some slight cropping at the top and bottom:

“Photo Credit: Larry Philpot of www.soundstagephotography.com.”

In 2013, Philpot uploaded the photo to Wikimedia Commons, which is governed by the standard Creative Commons license requiring attribution. The defendant did not give the specified attribution. Philpot sued in 2020 over the 2016 IJR publication, i.e., after the 3 year statute of limitations that no one seems to care about post-Petrella. (In theory, Philpot may only be able to get 3 years of damages, but such a cap won’t matter in this case).

Philpot claims his standard photo licensing fee is $3,500, but reuses of the photo from Wikipedia Commons didn’t require any payment (just attribution). The IJR “article generated approximately $2 to $3 in advertising revenue for IJR based on the number of page views it received.”

The district court granted summary judgment to IJR. The Fourth Circuit reverses.

Nature of Use. “IJR has less of a case for ‘transformative’ use than the Andy Warhol Foundation did in Warhol. Unlike the orange dubbing in that case, IJR did not alter or add new expression to the Nugent Photo beyond cropping the negative space.” The district court found transformativeness because the defense placed the photo in a new context. The appeals court doesn’t see it. “Philpot took the Photo to identify Nugent. IJR used the Photo for precisely the same reason: to depict ‘The Nuge.’”

The court also says the photo use was commercial. This is what I call a “commercial editorial use”–ad-supported editorial content. Courts routinely split on whether commercial editorial use is commercial for fair use purposes. Here, the court says “IJR’s use of the Photo was exploitative: Philpot licensed the Photo, and IJR did not pay the customary price of direct attribution to Philpot.” Make sure you didn’t miss that: Philpot’s license “price” was attribution, not cash.

Nature of the Work. This was a concert photo. The court says it’s the product of creative choices, so it’s entitled to “thick” copyright protection. From my view, a photo of a real-time event never should be given “thick” copyright protection.

Amount Taken. “IJR copied a significant percentage of the Photo in its article, and it only cropped out the negative space while keeping the Photo’s expressive features, or the ‘heart’ of the work.”

Market Effect. IJR argued that Philpot provided free licenses to the work. The court says it presumes harm with a commercial non-transformative use. Ugh. Further, “if IJR’s challenged use becomes uninterrupted and widespread,” it hurts Philpot’s potential market of licensing to media outlets. Philpot “relies on attributions or payments from users of his images to sustain himself in the world of concert photography.” Except, attribution and payment aren’t the same thing.

Implications

What is Philpot’s maximum potential damages here? Actual damages should be trivial. Philpot permitted CC-licensed reuses of the photo for free, subject to attribution. Philpot wasn’t looking to maximize his cash flow from this photo. From the defense side, the photo was just one piece of a multi-piece article that was only worth $2-$3 in total. There is no reasonable circumstance where the defense would have paid any fee to license the photo. Instead, IJR would have kept looking for a “free-to-use” photo of The Nuge or just skipped adding a photo entirely.

Because Philpot was willing to license the photo for free, Philpot’s only “harm” was any reputational or economic benefit he would have gotten from the omitted attribution. With respect to attribution from a listicle that only generated $3 of revenue, those attribution benefits were de minimis and wholly speculative.

This is a long way of saying that Philpot’s actual damages shouldn’t be measured by his commercial royalty rate of $3,500 because that transaction never would have happened. It should be measured by the economic value to IJR. If IJR gives 100% of its economic benefit from the article, Philpot should get less than $3 in actual damages.

Instead of actual damages, Philpot may dream of big statutory damages. The court should consider the Wikimedia Commons availability and the $3 of revenue in setting the statutory damages. I would be shocked if statutory damages were more than the $3,500 licensing fee; and I would not be shocked if they were the $750 minimum.

Even if Philpot gets statutory damages or his licensing fee as actual damages, the costs of adjudicating this case to the Fourth Circuit and then spending more on remand surely overwhelms those damages. At this point, it seems like this case is about attorneys’ fees. If the lower court doesn’t award them, then Philpot made a terrible economic decision. If I were the lower court judge, seeing Philpot taking this case on appeal for a $3 article rather than working towards a reasonable settlement, there is no way I would award him attorneys’ fees.

The ridiculously low economic stakes of this case are what the CCB was designed to handle. This case was filed before the CCB existed, so Philpot didn’t have that choice. I checked on Friday morning, and I didn’t see any CCB cases filed by Philpot.

We’re still assessing the consequences of the Warhol decision. My question: would this case have reached the same outcome pre-Warhol? Before Warhol, courts have split on fair use in situations like this, where a slightly modified photo is used to illustrate a listicle. From my perspective, the minimal cropping in this case might not have been enough modifications to constitute “transformative” use in the pre-Warhol jurisprudence.

On the other hand, the Fourth Circuit’s sided with Philpot on all judgment calls, and it  otherwise deployed anodyne assessment of the equities in this case, none of which pointed to Philpot. This approach might have reflected a more pro-copyright bent motivated by the tenor of Warhol. Without the pro-copyright signals sent by Warhol, I could imagine other courts subjecting Philpot’s fair use arguments to more rigorous scrutiny given his litigation over CC-licensed photos and the ridiculously trivial economic stakes of this case.

Case citation: Philpot v. Independent Journal Review, No. 21-2021 (4th Cir. Feb. 6, 2024)

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