On May 18, 2023,  the Supreme Court found that artistic changes to a pre-existing work, alone, not necessarily sufficient to make a derivative work fair use. The actual use of the derivative work is important as well, and it is not fair use if the derivative work is used for the purpose of competing with or supplanting the underlying work used to create the new work.

At issue before the Supreme Court in Andy Warhol Foundation for the Visual Arts Inc. v. Goldsmith was whether or not Warhol’s use of Goldsmith’s photograph as a reference and departure point for the creation of an image of Prince constituted fair use or copyright infringement under U.S. copyright law. The Supreme Court narrowed its attention to the only issue before it, the use of the image in a magazine instead of Goldsmith’s photo, as opposed to as a series of paintings/lithographs.

Applying a new lens on how to view the purpose of a derivative work under U.S. copyright law,  the Supreme Court focused on the actual use made, i.e. what the user does with the original work. While Andy Warhol made artistic changes and added new elements by cropping, coloring, and make other artistic additions/changes to Goldsmiths photo, it did not establish fair use since the use of the derivative work before the court (use in a magazine as an image of Prince) was competitive with the underlying work. Therefore, even though Warhol’s efforts turned Goldsmith’s depiction of Prince as a vulnerable, uncomfortable person into presenting him as a larger than life icon, the majority found that this was not sufficient alone to make the work transformative and thereby support a finding of fair use.

Copyright law in the U.S. goes all the way back to our Constitution, which gave Congress the power “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Thus, copyright law provides authors with the right to control the use of their creative works. Contrasting, Congress, in enacting our copyright law determined that there are certain uses of another creator’s work that are beneficial to society and promoting freedom of expression. The legal concept of fair use is designed to balance these two conflicting goals — protect the financial and artistic interests of authors while permitting certain positive uses of those same works.

Fair use actually permits the unlicensed use of copyright-protected works in certain circumstances. So, something that might otherwise be infringing — the reproduction of portions of a book for educational or criticism purposes — is determined to be beneficial and not considered infringement. U.S. copyright law identifies certain types of uses — such as criticism, comment, news reporting, teaching, scholarship and research — that are particularly important to our society. The determination of fair use requires assessing four separate factors, only one of which was at issue before the Supreme Court:

“The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.”   

The Supreme Court had previously endorsed a “transformation” test to apply to this factor- whether the new work merely ‘supersede[s] the objects’ of the original creation, (‘supplanting’ the original), or instead adds something new, with a further purpose or different character that serves to transform the underlying work into essentially something else.  Allowing Warhol’s work to literally replace Goldsmith’s work as a depiction of Prince in a magazine did not, in the majority’s view, change the purpose of the work as a depiction of Prince, and thereby protected Goldsmith’s right as a copyright owner to authorize derivative works which is one of the exclusive rights granted a copyright owner under U.S. copyright law. The Supreme Court noted how this was different than Andy Warhol’s famous Campbell soup cans. Those works were “artistic commentary on consumerism, a purpose that is orthogonal to advertising soup”. The Court noted also how this contrasted from the Supreme Court’s finding that 2 Live Crew’s use of Roy Orbison’s song “Pretty Woman”  was a clear commentary on the prior song and provided new meaning that was not designed to compete with or supplant the pre-existing work.

Ultimately, it seems that the Supreme Court went to great lengths to minimize the impact of its decision.  Holding in Warhol’s favor could have made the “transformation” test a one factor fair use test — focusing solely on an aesthetic transformation or the purpose of the artist would make it difficult for any work to be deemed derivative, i.e., infringing, as opposed to transformative and therefore protected by fair use. Some artists were concerned that to allow such appropriation without limits would undercut the secondary market for original works of art.   As Goldsmith’s counsel, Lisa Blatt, argued before the Court that  “adding new meaning to a work is simply not a good enough reason to copy for free, ” and that such a result “would decimate the art of photography by destroying the incentive to create the art in the first place.” 

In this way the Supreme Court honors the original purpose of the copyright laws as set out in the Constitution and copyright law, rather than undercut by making free appropriation the rule rather than the exception. This decision also falls in line with other equity-based judicial determinations where financial considerations form an unstated additional fair use factor balancing what is really fair about not paying for the use vs. the profit made from the use.  From that perspective, regardless of Warhol’s creativity it is understandable to view Goldsmith as the owner of rights to her work and see that Warhol had simply made too much use of the photograph in replacing it to ethically and equitably avoid paying licensing fees.

Here, the Supreme Court did not go that far by limiting its application of the “purpose” test to one of direct competition and supplanting of the original work, leaving many questions unanswered, including potentially whether Warhol’s Prince series—as a series of artworks not published in a magazine- would constitute fair use.