In Brownmark Films, LLC v. Comedy Partners, the US Court of Appeals for the Seventh Circuit affirmed the district court order granting Comedy Partners' motion to dismiss Brownmark's copyright infringement suit based on the fair use affirmative defense. The Seventh Circuit also expressed favor in extending the incorporation-by-reference doctrine to audio-visual works.
Key Litigated Issues
In Brownmark Films, LLC v. Comedy Partners, the key issue before the US Court of Appeals for the Seventh Circuit was whether the district court erred in granting Comedy Partners' motion to dismiss Brownmark's copyright infringement claim based on the defense of fair use. Specifically, the Seventh Circuit addressed whether the district court properly:
Considered the affirmative defense of fair use in deciding on the motion to dismiss.
Concluded that the use was a fair use.
Background
The animated television show South Park is notorious for its parody and satire of current events and pop culture. In an episode satirizing the 2007-2008 Writers' Guild of America strike, popular viral videos and the difficulty of monetizing Internet fame, the characters create a viral video called "What What (In The Butt)" (WWITB), based on a real viral video of the same name. Brownmark owns the copyright for the real WWITB video. The South Park video is very similar to Brownmark's video with the same angles, framing, dance moves and visual elements.
Brownmark sued South Park Digital Studios (SPDS) and others for copyright infringement. Brownmark's complaint referenced both versions of WWITB, but it did not attach either work to the complaint. SPDS moved to dismiss the lawsuit for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure (FRCP), asserting that its version of WWITB was a non-infringing fair use under Section 107 of the Copyright Act. SPDS attached both videos.
Brownmark argued that the court could not consider fair use on a Rule 12(b)(6) motion to dismiss. However, Brownmark did not substantively oppose SPDS's fair use defense.
The district court granted SPDS's motion to dismiss, finding fair use. Brownmark appealed, arguing that:
Fair use is an improper basis for granting a Rule 12(b)(6) motion to dismiss.
SPDS's WWITB video is not a fair use of the original WWITB video.
Outcome
The Seventh Circuit held that the district court properly granted Comedy Partners' motion to dismiss based on the defense of fair use, finding that the district court:
Could properly decide fair use on SPDS's motion.
Properly found fair use.
The court noted that courts generally should not grant Rule 12(b)(6) motions on affirmative defenses because:
The availability of a potential affirmative defense does not mean a claim is invalid.
Affirmative defenses typically turn on facts not before the court at the Rule 12(b)(6) motion to dismiss stage.
However, when all relevant facts are presented, the court may properly dismiss a case before discovery. In this case, the court found that only two pieces of evidence were needed to decide the question of fair use:
The original WWITB video.
The South Park episode at issue.
Procedural Determinations
While the Seventh Circuit affirmed the district court's dismissal, it did so by treating SPDS's motion as one for summary judgment, rather than for dismissal on the pleadings.
Because Brownmark's complaint did not attach the two videos at issue, the court found that reliance on those materials required either:
Converting the motion to dismiss into a motion for summary judgment, which Rule 12(d) of the FRCP generally requires if a Rule 12(b)(6) motion contains materials outside of the pleadings.
Reliance on the incorporation-by-reference doctrine. Under this doctrine, if a plaintiff mentions a document in his complaint, the defendant may then submit the document to the court without converting the Rule 12(b)(6) motion into a motion for summary judgment.
The Seventh Circuit acknowledged that although district courts have applied incorporation-by-reference to audio-visual works, no court of appeals has ruled on the matter. The court expressed favor in extending incorporation-by-reference to audio-visual works in light of technological changes. However, since the parties did not brief the issue, the court reserved resolution of applying the doctrine to audio-visual works for a later date.
Instead, the Seventh Circuit treated SPDS's motion as a motion for summary judgment, reasoning that:
While SPDS should have captioned its motion as a motion for summary judgment, the procedures for both motions are essentially the same, so that the miscaptioning should not have caused confusion.
The miscaptioning is harmless error where the plaintiff could not have offered evidence in response.
Since the district court only needed the two videos to adjudicate fair use, the Seventh Circuit held that it properly considered an affirmative defense in a motion for summary judgment, regardless of what caption SDPS used.
Fair Use Determination
In ruling on whether the district court correctly determined the question of fair use, the Seventh Circuit found that Brownmark had waived the issue by failing to oppose SDSP's fair use argument in district court.
However, the court then went on to agree with the district court on substantive grounds that this was an obvious case of fair use, specifically agreeing with the district court's analysis and findings under each of the four fair use factors set out in Section 107 of the Copyright Act. The court found that all four factors weighed in favor of a finding of fair use because:
The purpose and character of SPSD's use, a parody, has obvious transformative value.
While creative and expressive works generally receive the highest level of copyright protection, this factor provided little help to Brownmark since parodies typically copy publicly known, expressive works.
Copying substantial portions of a work is typically required for a parody to be successful. In the context of parody, the amount taken is reasonable if the parody does not serve as a market substitute for the work.
SPSD's parody cannot have an actionable effect on the potential market for or value of the original WWITB video since SDSP's likely effect, ironically, would only increase ad revenue for the original WWITB video.
Practical Implications
While SDSP's miscaptioning of its motion did not affect the court's ultimate determination, copyright owners should take note of the potential consequences of filing a motion to dismiss in the context where a motion for summary judgment is appropriate. This case also cautions copyright owners that in certain circumstances courts can dismiss cases before discovery based on the fair use affirmative defense, and counsels in favor of including substantive arguments in opposing these motions.
The court's decision also suggests a willingness to apply incorporation-by-reference to audio-visual works, which may help defendants succeed more easily on Rule 12(b)(6) and 12(c) motions.