Infinity Broadcast Corp. v. Kirkwood

• Decision Date: 29 July 1998
• Docket Number: Docket No. 97-7764
• Citation: 150 F.3d 104
• Court: U.S. Court of Appeals — Second Circuit
• Parties: 1998 Copr.L.Dec. P 27,789, 47 U.S.P.Q.2d 1295, 26 Media L. Rep. 2045, 12 Communications Reg. (P&F) 1081 INFINITY BROADCAST CORP., Plaintiff-Appellant, v. Wayne KIRKWOOD, doing business as Media Dial-Up, Defendant-Appellee.

Page 104

150 F.3d 104

1998 Copr.L.Dec. P 27,789, 47 U.S.P.Q.2d 1295,

26 Media L. Rep. 2045,

12 Communications Reg. (P&F) 1081

INFINITY BROADCAST CORP., Plaintiff-Appellant, v. Wayne KIRKWOOD, doing business as Media Dial-Up, Defendant-Appellee.

Docket No. 97-7764.

United States Court of Appeals Second Circuit.

Argued March 23, 1998.

Decided July 2, 1998.

Amended July 29, 1998.

Bruce B. Keller, New York City (Debevoise & Plimpton, Jeremy Feigelson, Robert J. Driscoll, of Counsel), for Plaintiff-Appellant.

Wayne Kirkwood, Dallas, TX, pro se, for Defendant-Appellee.

Before: FEINBERG and CALABRESI, Circuit Judges, and SEYBERT, District Judge. ^*

FEINBERG, Circuit Judge:

Plaintiff Infinity Broadcasting Corp. ("Infinity") appeals from a judgment of the United States District Court for the Southern District of New York, Lewis A. Kaplan, J., dismissing Infinity's complaint against defendant Wayne Kirkwood, doing business as Media Dial-Up ("Kirkwood" or "Dial-Up"). Infinity, which now operates as CBS Radio, is one of the largest networks of radio broadcasters in the country and is the copyright-holder of the programs broadcast on its stations. Dial-Up enables subscribers (for a fee) to listen over the telephone to contemporaneous radio broadcasts in remote cities, including broadcasts by Infinity-owned stations.

Infinity commenced this copyright infringement action in February 1996, seeking an injunction restraining Kirkwood from retransmitting copyrighted material broadcast by its stations. Kirkwood, appearing pro se (as he does on appeal as well), responded that his is a non-infringing "fair use" of Infinity's broadcasts under 17 U.S.C. § 107, and that he is exempted from liability as a "carrier" under 17 U.S.C. § 111(a)(3). After both parties moved for summary judgment, they stipulated that the case be tried on a record consisting of their summary judgment submissions and other stipulated and submitted facts. See Infinity Broadcasting Corp. v. Kirkwood, 965 F.Supp. 553, 555 (S.D.N.Y.1997). After considering this record, the district court in a thorough opinion granted judgment to Kirkwood on the basis of his fair use defense. Id. at 561. The court did not address the carrier defense. Id. We hold that Kirkwood's retransmission of the copyrighted broadcasts is not a fair use. We therefore reverse the judgment of the district court and remand for consideration of Kirkwood's carrier defense.

I. Background

Dial-Up is a system designed by Kirkwood to enable his customers to listen to radio broadcasts originating in various cities throughout the United States. At the time of the trial the Dial-Up system allowed access to the 10 largest radio markets in the country, and Kirkwood plans to expand to more cities. In each city Kirkwood places a radio receiver connected to a phone line. The receiver, like a normal radio, receives broadcasts over the air. It then transmits them into the phone line so that a caller can listen to whatever station the receiver is tuned to. The receiver responds to commands entered via touch-tone phone so that a caller can tune the receiver to different stations. Dial-Up subscribers pay a fee in exchange for a list of the (unpublished) phone numbers connected to the receivers. Kirkwood exercises no control over the selection of stations by callers, though he has apparently developed (but not implemented) a version of the system that could block the retransmission of particular stations. Except for a potentially costly long-distance phone bill (from which Kirkwood derives no benefit), there is nothing to prevent a caller from listening to a particular station 24 hours a day, seven days a week. Dial-Up is marketed to radio stations, advertisers, talent scouts and others in the entertainment and advertising industry for purposes such as "auditioning on-air talent, verifying the broadcast of commercials, and listening to a station's programming format and feel." Infinity, 965 F.Supp. at 555. It is also, as Kirkwood emphasizes, marketed to performance rights organizations to assist them in enforcing the copyrights of their member artists.

Infinity owns a large network of radio stations, including stations in each of the markets in which Dial-Up has a receiver. Some of the programs that originate on Infinity-owned stations are syndicated, meaning that they are broadcast on stations in other markets in exchange for a fee or for advertising time. Some, but not all, of Infinity's stations have "listen lines," station-specific versions of Kirkwood's service that the stations offer for free to certain clients. On October 8, 1996 (after Infinity began this litigation) a Dial-Up subscriber, at Infinity's request, used Dial-Up to gain access to and record some or all of three radio programs broadcast on Infinity-owned stations. On October 18, Infinity registered these programs with the Copyright Office, and three days later served an amended complaint on Kirkwood adding claims for infringement of Infinity's copyrights in the three programs to its existing request for injunctive relief.

In June 1997, the district judge held that Kirkwood's actions were protected by the fair use defense set out in 17 U.S.C. § 107. ¹ Applying the four factors enumerated in that statute, he decided that on balance they favored Kirkwood and that Kirkwood's use diminished neither the incentive of broadcasters to generate new creative programming, nor their "ability to gain a fair return on their endeavors." 965 F.Supp. at 560-61. This appeal followed.

II. Discussion

A. Burden of Proof and Standard of Review

According to the district court, it is "virtually undisputed" that Infinity has the exclusive right to perform its copyrighted programs and that Kirkwood's retransmissions infringe unless protected by either the fair use or carrier defense. 965 F.Supp. at 555. Since fair use is an affirmative defense to a claim of infringement, the burden of proof is on its proponent. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994); American Geophysical Union v. Texaco, Inc. 60 F.3d 913, 918 (2d Cir.1994) (party claiming fair use "typically carries the burden of proof as to all issues in the dispute").

"Fair use is a mixed question of law and fact. Where the district court has found facts sufficient to evaluate each of the statutory factors, an appellate court need not remand for further factfinding but may conclude as a matter of law that the challenged use does not qualify as a fair use of the copyrighted work." Harper & Row v. Nation Enterprises, 471 U.S. 539, 560, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) (internal quotations and citations omitted). We therefore review the district court's fair use conclusion de novo, "though we accept its subsidiary findings of fact unless clearly erroneous." Texaco, 60 F.3d at 918.

B. Analysis

Fair use is an "equitable rule of reason," which is to be applied in light of the statute. Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 448, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984) (quoting the House Report, H.R.Rep. No. 94-1476, pp. 65-66).

First, we look to the statutory preamble which lists, as being potentially fair uses, use "for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research." 17 U.S.C. § 107. Although these categories "have an 'illustrative and not limitative' function, ... the illustrative nature of the categories should not be ignored." Ringgold v. Black Entertainment Television, Inc., 126 F.3d 70, 78 (2d Cir.1997) (quoting Campbell, 510 U.S. at 577, 114 S.Ct. 1164). We note that Kirkwood's retransmissions fall into none of these illustrative categories.

Next, the statute instructs us to consider:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

17 U.S.C. § 107(1)-(4). These factors "are not meant to be exclusive." Harper & Row, 471 U.S. at 560, 105 S.Ct. 2218. "Nor may [they] be treated in isolation, one from another. All are to be explored, and the results weighed together, in light of the purposes of copyright." Campbell, 510 U.S. at 578, 114 S.Ct. 1164. Since fair use "is a doctrine the application of which always depends on consideration of the precise facts at hand," Texaco, 60 F.3d at 916, we turn now to the application of the statutory factors to the facts of this case.

1. Purpose and Character of the Use

The first statutory factor is the purpose and character of the alleged infringing use. The focus of this factor is

whether the new work merely supersedes the objects of the original creation[,] or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is "transformative."

Campbell, 510 U.S. at 579, 114 S.Ct. 1164 (internal citations omitted). The district court found that this factor "cuts to some extent in Kirkwood's direction," primarily because Kirkwood "is using [Infinity's] broadcasts for a quite different purpose," namely for information rather than entertainment. 965 F.Supp. at 557. Kirkwood, too, argues at length about the differences between Infinity's purposes for its broadcasts and the reasons his customers use Dial-Up. We agree that the difference in purposes tends to support Kirkwood's fair use claim. However, difference in purpose is not quite the same thing as transformation, and Campbell instructs that transformativeness is the critical inquiry under this factor.

Although it "is not absolutely necessary" for a fair use to be transformative, "the more...