This copyright case pitted two big YouTube content brands against each other over issues of fair use. On one side is Equals Three, LLC, a YouTube content studio and channel created and owned by Ray William Johnson, an early YouTube content pioneer. The Equals Three channel has over 10 million subscribers and over 3 billion total views making it one of the most viewed channels on YouTube. Equals Three produces YouTube comedy content. A typical program involves a host who gives an introduction to a particular video clip, shows parts of video clips (which are usually shown in edited form and inset within a decorative graphical frame) and tells humorous or provides humorous commentary about the events and people presented in the clip. Each program is roughly five minutes long and typically features three segments, each of which centers around a different video.
One the other side is Jukin Media, Inc. Jukin is a digital media company that primarily acquires user generated video content and distributes and monetizes such content over multiple online platforms and traditional media outlets, produces and licenses. Jukin acquires the user-generated content by using a research and acquisitions team of eleven people to scour the internet for videos likely to become sensationally popular. Once Jukin acquires the rights to user-generated content, it uploads the video to its YouTube channel and its own websites. Jukin makes money from these videos by ad-supported or subscription-based platforms. Jukin also licenses these videos to other digital, television and cable shows.
Jukin claimed that Equals Three unlawfully used ninteen Jukin owned or controlled clips in one or more Equals Three episode. Jukin instated numerous Content ID claims with YouTube against various Equals Three episodes. These claims prevent Equals Three from monetizing the episodes at issue and allows Jukin to receive all advertising revenue related to such episodes. Equals Three filed a complaint for a declartory judgment that its use of Jukin’s videos was fair use.
In determining whether the use of a work is a fair use, courts consider the following factors: (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.
The Purpose and Character of the Use
This factor measures whether a work is “transformative” in nature; whether it “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” The more transformative the new work, the less will be the significance of the other factors that may weigh against a finding of fair use.
Equals Three claims that its episodes are transformative because they are parodies of the Jukin videos. Jukin argues that the episodes are not parodies because they do not critique Jukin’s videos. With the exception of one of Jukin clip, the court disagreed with Jukin. The court held that:
the episodes comment upon or criticize Jukin’s videos…[they] directly respond to and highlight humorous aspects of Jukin’s videos. The episodes do so via the host’s reactions to the videos, jokes, narration, costumes and graphics. The host’s narration does not simply recount what is shown in Jukin’s videos; instead the host makes comments about Jukin’s videos that highlight their ridiculousness by creating fictionalized narratives of how the events transpired, using similes, or by directly mocking the depicted events and people.
However, with regard to one clip – a clip of the first person to obtain an iPhone 6 in Perth, Australia promptly dropping the phone upon opening the packaging – the court did not find Equals Three’s use transformative. Equals Three said it used this footage for the purpose of making two points: (1) don’t be the first person to do something new; and (2) the iPhone 6 packaging is absurd. The court finds that these two “general, broad points” are not directly aimed at criticizing or commenting on the video and thus not transformative.
Nature of the Copyrighted Work
This factor looks at what type of work it is (i.e., is it a creative work or something else) and whether this is a type of work that falls closer to the core of copyright’s protection. In dicta, the court questioned whether the “point and shoot” variety of user generated content is a creative work or a factual recitation (which is not as close to the core of copyright’s protection as is a creative work). Ultimately the court concludes that the nature of the Jukin clips is creative, but the clips’ creative nature is “not particularly important where the new work is highly transformative.”
Amount and Substantiality of the Portion Used
The third factor examines the quantitative amount and qualitative value of the original work used. Jukin argued that while Equals Three may have not used all of the clips, it used the most important parts of the clips. Equals Three argued that it used no more of the clips than was necessary to create its parody episode. The court agreed finding that Equals Three did not use more than reasonably necessary to “convey enough of the events to allow the host’s jokes, comments, and criticisms to make sense to the viewer and resonate.”
Market Harm Through Substitution
This factor examines whether the use harms the potential market for or value of the original work because it has created a market substitute. That is, does the new work diminish demand for the original work by acting as a substitute for it. Market harm cannot be established by allowable commentary and criticism. Also, damage to a licensing market caused by fair use is not recognizable under this factor.
While the transformative nature of Equals Three’s videos makes cognizable market harm less likely, the court was unable to say that it is completely implausible that at least some viewers would substitute Jukin’s videos with Equals Three’s videos. The court noted that both videos are meant to be humorous and it could imagine a fine line between the demand for the humorous original and the humorous new work commenting thereon. Nevertheless, the court found that Jukin failed to show actual evidence of any such harm; and where market harm is hypothetical, this factor is neutral.
Based on the “highly transformative” nature of Equals Three episodes and the fact that Equals Three used only what was reasonably necessary to achieve their transformative purpose, the court found Equals Three’s use of Jukins’ clips (with the exception of one clip) to be fair use.