Court Nix Clean Flicks

By John Ottaviani

Clean Flicks of Colorado, LLC vs. Soderbergh, No. 02-CV-01662-RPM (D. Colo., July 6, 2006).

The entertainment world has given us yet another example as to why one should be very wary of creating or investing in a business model built on the foundation that its activities are legitimate under the “fair use” exception to the U.S. copyright laws.

Here four companies were copying, editing and/or distributing copies of movies by deleting “sex, nudity, profanity and gory plots.” The editing techniques used included redaction of audio content, replacement and redaction with ambient noise, “blending” of audio and visual content to provide transition of edited scenes, cropping, fogging, or the use of a black bar to obscure visual content. The companies would purchase an authorized copy of each movie for each edited copy that they sold or rented.

Various motion picture studios and directors of the movies moved for summary judgment on copyright infringement claims, arguing that these practices infringed their exclusive rights to reproduce the copyrighted movies under Section 106(1); their right to create derivative works under Section 106(2); and the exclusive right of distribution of copies under Section 106(3).

Despite extensive submissions from the companies and from viewers expressing their appreciation for the opportunity to view movies without concern for horrible effects on the children, Judge Richard P. Matsch found the argument “inconsequential to copyright law and is addressed to the wrong forum.” The court cited the Family Movie Act of 2005 as an example where Congress had the opportunity to make the policy choice urged by the defendants but did not do so.

The Court then undertook a fairly straight-forward “fair use” analysis of the four (4) factors set out in Section 107 of the Copyright Act. The Court found that the edited films were not “transformative” because they added nothing new to the movies, simply deleting scenes and dialogue from them. The Court went on to contrast the situation from the decision in Bill Graham Archives v. Dorling Kindersley Ltd., 498 F.3d 605 (2d. Cir. 2006), where the publisher of a coffee table book about the Grateful Dead made fair use of that music group’s event posters and tickets. The Court also found that the creative expressions in the movies and the fact that the movies were copied in almost their entirety for non-transformative use also weighed in favor of the movie studios.

Finally, although the companies argued that there was no adverse effect from their use of the movies and the value of the copyrighted work to the studios because they purchased an original copy each time they edited a copy, the Court found that this argument ignored the intrinsic value of the right to control the content of the copyright work which is the essence of the law of copyright. Score one for the content owners.

Curiously, the studios did not assert a claim that the copying of the movies by the companies for purpose of editing is a violation of the Digital Millennium Copyright Act. Whether this was for litigation strategic purposes, or an oversight, we will leave to speculation.

I found the judge’s holding, that because the edited films were not transformative, they were not “derivative works” for purposes of Section 106(2), a bit bewildering. A finding that the works are not “transformative” does not equate to a finding that they are not derivative works. While I cannot come up with examples right now, it would seem that a work could be a “derivative work” without being “transformative.” In any event, the holding was totally unnecessary, as the decision found that the 106(1) and 106(3) rights had been violated.

Whether the decision will have an effect on various websites such as Youtube.com, which host parodies, “mash-ups” and other edited versions of videos, remains to be seen. The movie studios and directors will have a more difficult case to win. The websites generally will be immune from liability under Section 230 of the Communications Decency Act or under Section 512 of the Digital Millennium Copyright Act, so long as they do not “induce” copyright infringement a la Grokster. It may not be worth the expenditure of time and money for the studios and directors to chase the individual creators of these videos. But then again, we said that in the music context, too.

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