Fair use analysis often has a central role in determinations of copyright infringement. Two recent cases have clarified the application of the fair use doctrine to Internet related activities. The Ninth Circuit held a copyright owner must consider the application of the fair use doctrine before sending a takedown notice seeking to remove material from the Internet. The Second Circuit held the Google Books project (digitizing 20 million books and providing a search function) constitutes fair use because it is transformative.
I. Lenz v. Universal Music Corp  (the Dancing Baby Case).
In mid-2007, Stephanie Lenz posted a 29 second video of her children dancing to “Let’s Go Crazy” by Prince. She titled the video “Let’s Go Crazy No. 1”. Universal Music Corporation, responsible for enforcing Prince’s copyright, sent a Digital Millennium Copyright Act (DMCA) takedown notification. YouTube removed the video, but Lenz sent a counter notification (which resulted in reinstatement of the video) and filed an action for declaratory relief. In 2008 Lenz amended her complaint to seek damages for misrepresentation under the DMCA.
Eight years after the video was originally posted, the Ninth Circuit, considering an issue of first impression, held the copyright owner must consider fair use before sending a takedown notification. A trial is required to determine if Universal’s agent formed a good faith belief the video did not make fair use of Prince’s music.
The applicable statute, 17 U.S.C. § 512(f), provides for damages, including costs and attorneys’ fees, if:
Any person . . . knowingly materially misrepresents under this section – (1) that material or activity is infringing . . . .
A “notification of claimed infringement” is required to include “a statement that the complaining party has a good faith belief that use of the material is not authorized by . . . the law.” 17 U.S.C. § 512(c)(3)(A)(v).
To satisfy these statutes “a copyright holder need only form a subjective good faith belief that a use is not authorized.” The standard is subjective because the statutes impose liability only if the copyright owner “knowingly” misrepresents a good faith belief. These principles were previously established in Rossi v. Motion Picture Ass’n of Am. Inc., 391 F.3d 1000, 1004-5 (9thCir. 2004).
Although fair use is often characterized as an affirmative defense, the fair use statute states fair use “is not a copyright infringement.” 17 U.S.C. § 107.
We conclude that because 17 U.S.C. § 107 created a type of non-infringing use, fair use is “authorized by the law” and a copyright holder must consider the existence of fair use before sending a takedown notification under § 512(c).
Lenz, 801 F.3d at 1132.
The Ninth Circuit found a material issue of fact whether Universal had “knowingly” misrepresented in its takedown notification that it had formed a good faith belief the video was not authorized by law. Universal did not formally consider fair use, but consideration was given to the amount of the song used and how it was used.  Even if there are no actual damages, the potential damages recoverable at trial for misrepresenting the Lenz video infringed the Prince copyright include nominal damages and attorneys’ fees.
II. Authors Guild v. Google, Inc.  (the Google Books case).
Since beginning in 2004, the Google Books project has digitized 20 million books. Availability of digital copies allowed Google to provide text searching capabilities. The search results provide “snippets” of text and enable a linguistic analysis showing the number of times the search terms appeared in the book.
Google limited the text available from each search. Each page of a book was divided into eight pieces (snippets). For example, a page with 24 lines of text would be divided into 8 snippets of 3 lines each. Up to three snippets could be returned with a search, but one out of every ten pages in the book and one of the eight snippets on each page were excluded from search results. These rules excluded 22% percent of the book.  Multiple searches for the same terms would produce the same snippets. By searching for different terms, the plaintiffs claimed up to 16% of the book could be reproduced. But the resulting collection of snippets would be random and discontinuous fragments.
As in the Dancing Baby case, the Google Books case built on a previous ruling. In Authors Guild, Inc. v. HathiTrust, 755 F.3d 87, 97 (2ndCir. 2014), the Second Circuit held that full text searches of digitized university libraries were fair use. The searches in HathiTrust allowed users to identify book titles based on search terms but did not reproduce the text of the book or a word count reflecting the number of times the search terms appeared in the book.
The creation of a full-text searchable data base is a quintessentially transformative use [and the] word search [result] is different in purpose, character, expression, meaning, and message from the page (and the book) from which it is drawn.
HathiTrust, 755 F.3d at 97.
Eleven years after the Google Books project began, the Second Circuit found allowing searchers to read snippets from the book was fair use because the search information was transformative. The court considered each of the fair use factors:
The Purpose and Character of the Use– The linguistic analysis provides previously unavailable information about the original books and the snippets serve a different purpose than the book itself. Thus the use was transformative. Although Google has a commercial purpose in digitizing the books, it does not charge for the search service.
The Nature of the Work -- The court held this factor “rarely played a significant role” in the fair use analysis and is not dispositive here.
The Amount Used-- The court emphasized the discontinuous and fragmented nature of the snippet search results.
The Effect on the Market-- The court concluded the snippets offer no meaningful experience of the author’s expression in the book itself. The snippets are essentially useful only to identify the work, not to substitute for the work.
The Google Books project constituted fair use and therefore did not infringe the rights of the authors of the books.
In the Google Books case, the authors also claimed the reproduction of text by snippets created an unauthorized derivative work. The Second Circuit held the collection of snippets resulting from a search was not a derivative work controlled by the author. The author only controls expressive content and has no exclusive right to provide information about how often specific words are used.
These cases show how the law adapts to technology incrementally and slowly. Fair use (and technology) allow authors to make transformative use of existing works of authorship. Fair use balances the rights of authors of new and preexisting works so that rewarding authorship serves the “ultimate goal of copyright . . . to expand public knowledge and understanding”. Authors Guild, 804 F.3d at ___; 2015 U.S. App. Lexis 17988 at *18. Even if the new work provides only 29 seconds of entertainment, fair use must be considered so copyright law does not unduly inhibit electronic publication.
801 F.3d 1126 (9thCir. 2015).  The Ninth Circuit suggested a computer algorithm might help satisfy the DMCA “requirements to somehow consider fair use.” Lenz, 801 F.3d at 1136. 804 F.3d 202 (2d Cir. 2015). Since 2005, Google has excluded any book altogether from snippet view if the author submits an on-line form requesting exclusion.