As a copyright attorney, a guilty pleasure of mine is watching YouTube debates on fair use. Seeing these debates is nothing short of inspiring because they prove an important point: anyone – not just attorneys – can understand and debate the law (as it should be). Since YouTube has become one of the primary laboratories of fair use, it is important to facilitate that debate with accurate legal information relevant to YouTubers. Of critical importance is clarifying the legacy of the (in)famous case: Equals Three v. Jukin Media.

Many people, understandably, believe Equal Three set a bad precedent for YouTubers because it went to a jury. But jury verdicts have absolutely no precedential value. And the opinion that resulted from Jukin’s motion for summary judgment was the first to recognize certain types of reaction videos as not just transformative, but highly transformative.

So what happened? Why all this confusion? And what does this opinion say? The answers require a little bit of an explanation, but given its importance to the community, I hope you bear with me.

Some Background

For those unfamiliar, Ray William Johnson was a famous YouTuber who created the YouTube show Equals Three. Almost all Equals Three episodes involved discussing online videos. In 18 of these episodes, Equals Three used 19 videos owned by Jukin without permission (one Equals Three episode used two videos owned by Jukin). Equals Three was receiving numerous DMCA takedown notices from Jukin. In order to stop Jukin from issuing these takedown notices, Equals Three decided to file a lawsuit.

At an early stage, Jukin filed a motion for partial summary judgment that Equals Three’s use of the videos was not fair use (I’ll explain what a motion for summary judgment is after discussing the opinion). The court in Equals Three denied Jukin’s motion for summary judgment as to all Equals’ Three episodes, except one episode called “Sheep To Balls” (no giggling).

So What Did The Court Say?

As many know, fair use is a context-sensitive inquiry that requires analyzing, weighing and balancing the four fair use factors together. Those factors are: (1) the purpose and character of the use, including its commercial nature; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used of the original; and (4) market harm. While certain factors, like the first fair use factor (i.e., the transformative use inquiry) have greater weight and affect the analysis of the other fair use factors, no single factor decides the fair use inquiry.

First Factor (Transformative Use): The court in Equals Three found each episode, except for “Sheep To Balls,” to be highly transformative. Here’s how the court explained why Equals Three’s use was highly transformative:

Equals Three’s episodes 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. … This is not a case where the addition of minimal narration, an introduction, or text did not change the essential character of the original work. … This is also not a case where Jukin’s videos are used “to get attention” or to “avoid the drudgery in working up something fresh.”

The court found that the “Sheep To Balls” episode was not transformative because Equals Three comments were “general” and “broad points that were not directly aimed at criticizing or commenting on the video.

A great deal of guidance can be gained from the Equals Three court’s analysis. If the host’s/reviewer’s comments are substantial and directly target the underlying work to criticize it – even by just making the original appear ridiculous – the use will likely be considered highly transformative. However, if the original work is used to make a point that does not target the original, is minimal and/or pretty much just used the original to get attention instead of creating something fresh that provides new insights and understandings, the use will not be considered transformative.

Second Factor (Nature of the Copyrighted Work): The second fair use factor examines whether the original work was creative or factual in nature and published or unpublished events (there was no dispute that Jukin’s videos were published for fair use purposes). Here, Jukin’s videos usually involved point and shoot videos of real (albeit absurd) events. Despite this fact, the court found them to be creative – which disfavors fair use. However, the court in Equals Three made it clear “the copied work’s creative nature is not particularly important where the new work is highly transformative.”

Third Factor (Amount and Substantiality Used): To begin, it is important to clarify this factor. The third fair use factor does not examine the amount used in isolation. Nor does it solely focus on whether the “heart” of the work was used in the new work. Rather, this factor examines the relationship between the transformative purpose and the amount and substantiality used of the original to achieve that purpose. If the amount and substantiality used is excessive in light of the purpose, this will cut against fair use. If the amount and substantiality used is reasonable in light of the purpose, this will favor fair use.

Even though Jukin argued that Equals Three took the “heart” of each video, the court found the amount used to be “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.”

This line should serve as a great mental guide for content creators on YouTube who engage in what they hope will be fair use. When using someone else’s copyrighted work for purposes of commentary or criticism, it is very wise to ask oneself “Do I need to use this part of the video in order for my comments to make sense?” (In my personal opinion, the amount used is not only a legal question but an artistic one as well. Videos that use excessive amounts of the original are, in my opinion, bad content because – at the very least – they demonstrate sloppy editing and pacing and – at worst –are horribly unoriginal).

Fourth Factor (Market Harm): The fourth fair use factor examines whether the use will result in a substantially adverse impact to the potential market for the original and its derivative works (a derivative work is where the original is used to create another work, like turning a book into a movie). When the use at issue involves criticism or commentary of the original, the potential for market harm shrinks dramatically because the law does not recognize a derivative market for critical works (Quinton Reviews said it best: the notion of asking for permission (let alone paying the copyright owner) to make a critical work “is a special kind of stupid not even worth considering as a realistic opinion.”).

Jukin argued numerous hypothetical market harms – each of which failed to demonstrate the existence of actual market harm.

First, Jukin argued that market harm to the original video because “Equals Three frequently copies its videos during the time when they are allegedly most valuable – shortly after their publication.” The court rejected this argument as mere speculation because Jukin failed to offer any evidence that this was the case as a general matter or for the videos in question (this is not to say it cannot be proven; rather Jukin failed to prove it). More importantly, the court attacked this form of market harm as a mirage because it “risks circular reasoning – if Equals Three’s use is fair then no license fee is required by it or by other similar users.”

Second, Jukin argued that it often licenses its videos for the exact same kind of uses as Equals Three. Again, the court rejected this argument because “there is no cognizable derivative market for criticism.”

Third, Jukin argued that viewers would watch Equals Three’s episodes instead of Jukin’s videos. But, the only evidence Jukin offered was blanket statement by Jukin’s director of licensing. The court rejected this argument as “fail[ing] to offer sufficient foundation to support this broad, unsubstantiated statement.”

Ultimately, because Equals Three could not substantiate its claim that its use increased views to the original, the court found that this “factor does not favor either party.”

Summary of Factors: Because fair use is a context-sensitive inquiry that requires analyzing all four fair use factors together, the court summarized its analysis as follows:

Here, Equals Three’s episodes (except Sheep to Balls) are highly transformative and use of Jukin’s videos [sic] only what is reasonably necessary to achieve their transformative purpose. The first and third factors thus strongly favor fair use. There is no proof of cognizable harm to any actual or potential market, and thus the fourth factor favors neither party. Moreover, though the second factor weighs against fair use, it is of little weight in light of Equals Three’s episodes transformativeness. Moreover, Jukin’s videos were published before Equals Three used them. Thus, on balance, the factors weigh in favor of fair use for all episodes except Sheep to Balls.

So why did it go to a jury and what happened?

In the case, Jukin filed a motion for partial summary judgment that Equals Three could not claim the fair use defense. A motion for summary judgment is when one side asks the court to decide the entire case or a certain issue in its favor because there is no dispute over the important facts and, given these facts, the law dictates judgment in that party’s favor.

This is was where the disaster happened. Equals Three did not move for summary judgment at all. Because Equals Three failed to move for summary judgment, the court did not evaluate whether the undisputed facts dictated judgment in favor of Equals Three, but only that Jukin was not entitled to summary judgment (as the court explained in an order on January 13, 2016 (Dkt. #77)). Consequently, all the episodes (except for “Sheep To Balls”) went to the jury. Had Equals Three moved for summary judgment, it is quite likely that the majority – if not all – of the remaining Equals Three episodes would have been declared fair use. If this had happened, this case may have never gone to a jury.

Unfortunately, I have no answers why Equals Three did not move for summary judgment and it would be unfair to toss out unsubstantiated speculation. But the reality is that the Equals Three opinion was the first to recognize transformative uses that were invented by YouTube content creators. As the YouTube community becomes more organized, sophisticated and effective at using the judicial process to gain legal recognition and protection, the Equals Three decision will be remembered as being the first brick in making legal recognition of new fair uses invented on YouTube as a reality.