Under the “fair use” doctrine, artists regularly include portions of copyrighted works in books, movies, television programs, music and other artistic works without obtaining licenses from the copyright owners. When one of these uses is challenged, Courts determine whether it was, in fact, “fair” or an unauthorized infringement.

Given the importance of the “fair use” clause to Congress’s twin, sometimes conflicting, aims of not stifling expression and creativity while, at the same time, incentivizing artists to exclusively control the exploitation of works they created, it is no surprise that the “fair use” rules are not black-and-white. Fair use determinations are to be made by applying four broadly worded “factors” set out Section 107 of the Copyright Act. Over time the boundaries of what is and is not “fair” have expanded, and the decisions applying the fair use “factors” have not always been consistent. The challenge artists face in predicting whether an unlicensed use of a copyrighted work will be deemed “fair” (or infringing) will likely increase with the United States Court of Appeals for the Seventh Circuit’s ruling this week in Kienitz v. Sconnie Nation LLC, No. 12-cv-464 (SLC) (Sept. 15, 2014). In Kienitz, the Court both criticized and distinguished itself from a major fair use ruling that the Second Circuit issued in 2013.

This type of judicial cat-call is a rarity. Before turning to its potential implications, some background.

The significance of the “fair use” doctrine cannot be understated. Creators of movies, television programming and music often use pre-existing copyrighted works in new works. For example, movies regularly incorporate film clips or quote from copyrighted works and songs regularly include “samples” from pre-existing copyrighted music. While these uses are often licensed, when they are not, the creator usually invokes the fair use doctrine if its use of the copyrighted works is challenged.

In reviewing the last two decades of film and music fair use cases, it’s obvious that courts have been receptive to expanding the scope of “fair use” protection since the United States Supreme Court decided Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994) (ruling that 2 Live Crew’s parody of classic Roy Orbison song “Pretty Woman” that used music and lyrics from original copyrighted work constituted “fair use”). In Acuff-Rose, the Supreme Court singled out the importance of “the extent the new work was ‘transformative’” in the fair use analysis, ruling that “the more transformative the new work, the less the significance of the [other] fair use factors.”

Fast forwarding to last year, in Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013), the Second Circuit issued a fair use ruling that surprised many. At issue was the use of Cariou’s copyrighted photographs in collages and other artwork that Prince (“a well-known appropriation artist” according to the Court) created. Cariou took the photographs over a six year period in Jamaica and published them in a book that Prince purchased. Prince incorporated “partial or whole images” of Cariou’s photographs into Prince’s artwork although he made some changes to them (e.g., enlarged, cropped, tinted or over-painted them). Despite the substantial use of Cariou’s photographs, the Second Circuit ruled that 25 of the 30 works were sufficiently “transformative” as to have “a new expression” and qualify for protection under the fair use doctrine, while declining to rule on the other five. Although the Second Circuit discussed the four enumerated fair use factors of 17 U.S.C. §107, the opinion placed heavy emphasis on its finding that Prince’s use of Cariou’s works was “transformative.

The Seventh Circuit in Kienitz also found that the challenged use – a modified photograph of the Mayor of Madison Wisconsin included on a t-shirt poking fun at the Mayor on a matter of public interest – qualified for fair use protection. However, the Court reached its conclusion through a different analysis than the Second Circuit in Prince v. Cariou. After noting that the parties and the District Court “have debated whether the t-shirts are a ‘transformative use’ of the photo” and how “’transformative’ the use must be,” the Court matter-of-factly stated that the term “transformative” nowhere appears in Section 107 of the Copyright Act and is not one of the statutory fair use factors. While acknowledging that the Supreme Court mentioned it in Acuff-Rose, in words expressly directed at the Cariou decision, the Seventh Circuit noted that the Second Circuit has “concluded that ‘transformative use’ is enough to bring a modified copy within the scope of §107.” This was not a compliment.

The Seventh Circuit voiced “skepticism” over the Second Circuit’s approach in Cariou and concern that making the “fair use” test turn on whether something is transformative “could override 17 U.S.C. §106(2), which protects derivative works.” Because the Copyright Act provides copyright owners with the exclusive right to approve and exploit derivative works, and because, according to the Seventh Circuit, “[t]o say that a new use transforms the work is precisely to say that it is derivative,” the Court faulted the Second Circuit for failing to explain how “every ‘transformative use’ can be ‘fair use’ without extinguishing the author’s rights under 17 U.S.C. §106(2).”

Rather than embrace the “transformative” fair use inquiry, the Seventh Circuit ruled that it was “best to stick with the statutory list” in 17 U.S.C. §107 in determining whether a use is fair. While the Seventh Circuit concluded, as noted above, that the challenged use was fair, it suggested that if the plaintiff photographer had made different arguments he might have defeated the “fair use” defense. Thus, the Court noted that the defendants did not need to use the Plaintiff’s photograph at all to “mock the Mayor” and that “[t]here’s no good reason why defendants should be allowed to appropriate someone else’s copyrighted efforts as the starting point in their lampoon, when so many non-copyrighted alternatives . . . were available.”

While the Kienitz decision may not have clarified the scope of the “fair use” defense, it did make the “fair use” playing field more interesting. The Kienitz and Cariou decisions suggest that fair use defenses may be received more favorably in the Second Circuit than in the Seventh. This could create incentives to forum shop with respect to works distributed nationwide (like books, movies and music), with the party making an unlicensed use filing in the Second Circuit for a declaration that its use was transformative and “fair” before it is sued in the Seventh Circuit (where its transformative nature is of decidedly lesser importance).