abstract. In its recent decision in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, the Supreme Court held that a defendant’s use of a plaintiff’s copyrighted work would be judged “transformative”—and therefore more likely to qualify as a fair use—not simply on the basis that the defendant had altered the plaintiff’s work, but in instances where the defendant had done so in a way that gave the defendant’s new work “a further purpose or different character.” Crucially, in assessing whether changes to the work gave it the requisite different purpose or character, the Warhol Court noted that works that have the same purpose are more likely to serve as substitutes—that is, to compete. On the other hand, works with different purposes are less likely to compete. For that reason, a defendant’s work that is based on a plaintiff’s but is sufficiently different in purpose that it does not compete with it is more likely to be found transformative, and is therefore more likely, all else equal, to be a fair use.

The key question after Warhol, then, is determining whether a defendant’s work is likely to compete with a plaintiff’s work for a particular use. Unfortunately, the answer to that question often will be far from self-evident, and judges will find nothing in copyright law itself to guide them. Instead, judges are likely to fall back on unguided, unreliable intuition. Fortunately, antitrust law offers tools we can employ to better understand whether two artistic or literary works are likely to compete for a particular use. This Essay argues that antitrust market definition and substitutability methodologies lend themselves surprisingly well to the post-Warhol copyright fair-use analysis. Moreover, this Essay argues that if the federal courts turn to antitrust law for help in implementing the Warhol Court’s focus on the prospect of substitution, the fair-use inquiry may, on the whole and over time, become modestly more friendly to defendants than it was before Warhol. This is despite the fact that the Warhol Court ruled against fair use in that particular case.

Introduction

In Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith,1 the Supreme Court considered whether the licensing of one of Andy Warhol’s Prince Series works (see the work on the left in Figure 1), for the purpose of illustrating a magazine story about the musician Prince, was a fair use of the Lynn Goldsmith photograph on which the Warhol work was based (see the photograph on the right in Figure 1).

FIGURE 1. warhol’s orange prince (left); goldsmith’s photographic portrait (right)

The Court’s review was limited to consideration of the first of four statutory fair-use factors—that is, “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.”2 A central element of that inquiry is determining whether a defendant’s use of a plaintiff’s copyrighted work is “transformative.”3 At the most general level, a defendant’s use of a plaintiff’s work is transformative when the defendant has not merely copied the plaintiff’s work, but rather has altered that work to an extent that the defendant’s activity, and not just the plaintiff’s, advances copyright law’s mission of encouraging the production of new works.4

The transformativeness determination has, over the past three decades, become one of the most important drivers of the fair-use analysis, if not the most important. Indeed, Barton Beebe’s recent empirical analysis of the factors driving results in fair-use litigation reveals that in cases where a court finds that the defendant’s use is transformative, “the ratio of the odds a defendant will prevail in its fair use defense to the odds it will fail is anywhere from 86 to 91 times greater.”5 “By this measure,” Beebe concludes, “a finding of transformativeness exerts by far the greatest impact of any finding on a court’s likelihood of making an overall determination of fair use.”6

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The transformativeness inquiry first took hold as a central element of fair-use analysis in the 1994 decision Campbell v. Acuff-Rose Music, Inc.7 In that case, the Supreme Court determined that the defendant’s use of portions of the plaintiff’s copyrighted song in a rap-music parody of that song was a fair use.8 The defendant’s work was transformative, the Campbell Court held, because it “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.”9 Transformative works like the defendant’s rap parody, the Court noted, should be treated more solicitously by copyright law: “[T]he goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works.”10 As a consequence, “[s]uch works thus lie at the heart of the fair use doctrine’s guarantee of breathing space within the confines of copyright.”11

Following Campbell but prior to Warhol, transformativeness was a protean concept, its definition uncertain and changing to fit the facts of the various disputes in which the concept was deployed. In Campbell itself and in many cases that followed it, transformativeness was assessed by examining the defendant’s work, and by referring to the ways in which it copied but also altered the content of the plaintiff’s work. For example, in Blanch v. Koons,12 the Second Circuit held that postmodern artist Jeff Koons’s use of the plaintiff’s fashion photograph in his Niagara collage (see the plaintiff’s work below on the left in Figure 2 and Koons’s Niagara below on the right in Figure 2) was a transformative fair use because Koons used the photograph as “raw material” for the creation of a work with new meaning and message.13

FIGURE 2. andrea blanch fashion photograph (left); jeff koons, niagara (right)

But sometimes, in cases where the defendant’s work copied but did not alter the content of the plaintiff’s work at all, transformativeness was assessed by considering the purpose to which the defendant had put the plaintiff’s work. For example, in Google LLC v. Oracle America, Inc.,14 the Supreme Court held that Google’s exact copying of portions of the Java Application Programming Interface15 and the reuse of that code in Google’s Android operating system for mobile phones was transformative because it was done for the purpose of creating a new product.16 Google’s copying of the Java code, the Google Court found, “seeks to expand the use and usefulness of Android-based smartphones,”17 and Oracle was not, nor was it likely to be, a competitor in the smartphone market. Similarly, in Authors Guild v. Google, Inc.,18 the Second Circuit held that Google’s wholesale copying of millions of books was transformative, and ultimately fair use, because the purpose of the copying—creating the Google Books online research tool—was not to reproduce or distribute the plaintiffs’ books as expression, but rather “to make available significant information about those books, permitting a searcher to identify those that contain a word or term of interest, as well as those that do not include reference to it.”19 For that reason, as the Google Court later framed it, Google’s copying “was consistent with that creative ‘progress’ that is the basic constitutional objective of copyright itself.”20

In Warhol, the Court assessed a claim for transformativeness of the first type: the Warhol Foundation asserted that Andy Warhol’s Prince Series portrait added new expression, meaning, or message to Goldsmith’s original photograph, and thus should be treated as transformative.21 The Court was no doubt wary of an approach to transformativeness that would grant fair-use immunity whenever a defendant even modestly alters the content of a copyrighted work.22 It accordingly attempted to anchor the transformativeness test to a key part of the rationale it had originally laid out in Campbell for giving transformative uses more solicitous treatment—that a transformative use was properly understood as not merely altering a copyrighted work, but doing so in a way that gave the defendant’s new work “a further purpose or different character.”23 Crucially, in assessing whether changes to the work gave it that required different purpose or character, the Warhol Court noted that works that have the same purpose are more likely to compete—that is, as the Court framed it, to serve as substitutes.24 On the other hand, works with different purposes are less likely to compete.25 For that reason, a defendant’s work that is based on a plaintiff’s but is sufficiently different in purpose that it does not compete with it is more likely to be found transformative, and is therefore more likely, all else equal, to be a fair use.26

Applying this test to the facts of the case, the Warhol Court held that licensing the Warhol portrait to illustrate magazine stories about Prince was not a fair use.27 The works were licensed for the same use; they were competing for that use and therefore shared the same purpose.28 As a consequence, the ways in which the content of the Warhol portrait differed from the Goldsmith photograph did not outweigh the commerciality of the use.29

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The key question after Warhol, then, is determining whether a defendant’s work is likely to substitute for—that is, compete with—a plaintiff’s work for a particular use. Unfortunately, the answer to that question often will be far from self-evident, and judges will find nothing in copyright law itself that tells them how to answer. Instead, judges are likely to fall back on intuition—as, we shall see, the Warhol majority itself did. We shall also see that our unguided intuitions about competition are not always reliable.

Fortunately, antitrust law offers tools we can employ to better understand whether two artistic or literary works are likely to compete. This Essay argues that antitrust market definition and substitutability methodologies lend themselves surprisingly well to the post-Warhol copyright fair-use analysis. Moreover, this Essay shows that if the federal courts turn to antitrust law for help in implementing the Warhol Court’s focus on the prospect of substitution, the fair-use inquiry may, on the whole and over time, become modestly more friendly to defendants than it was before Warhol. This is despite the fact that the Warhol Court ruled against fair use in that particular case.

To understand the Warhol Court’s revised approach to the transformativeness analysis and its likely consequences for the future of fair use, we must step back and look more closely at the facts of that case and the details of the majority opinion. Part I of this Essay does that, with particular attention to the Court’s focus on the prospect of competition as a tool for assessing transformativeness. Part II describes how antitrust lawyers assess whether particular goods or services are competitors. Part III argues that courts could, and indeed should, employ antitrust tools to address the particular competition questions the Warhol Court has identified as essential to the fair-use analysis. In particular, Part III considers how to adapt methods developed to advance antitrust law’s goal of protecting competition’s price-disciplining power to the very different context of copyright law, which seeks to create conditions that allow copyright owners to charge supracompetitive prices (i.e., prices above what a competitive market would otherwise dictate). The Essay then concludes.

I. the warhol court’s introduction of competition into the transformativeness analysis

In 1981, popular-music photographer Lynn Goldsmith, on assignment from Newsweek, took a photo of Prince (shown above in Figure 1).30 Prince was then an up-and-coming musician who was just about to release the album, 1999, that would put him on the path to becoming a pop icon. Later that same year, Newsweek used the photo to illustrate a two-page spread on the musician.31

In 1984, Vanity Fair planned a lengthy profile of Prince, to be written by noted cultural critic Leon Wieseltier, then a columnist for the magazine writing under the pen name “Tristan Vox.”32 Vanity Fair commissioned an illustration for the article from Andy Warhol, well-established by then as a pop-art superstar, and the magazine negotiated with Goldsmith’s agency for a license to Goldsmith’s 1981 photograph, to serve as an “artist reference” for the illustration.33 The terms of Vanity Fair’s license from Goldsmith stated that the illustration was “to be published in Vanity Fair November 1984 issue. It can appear one time full page and one time under one quarter page. No other usage right granted.”34 Goldsmith received four hundred dollars and a source credit in the article.35 The magazine didn’t disclose to Goldsmith that it had hired Andy Warhol to do the illustration.36

Andy Warhol used the photograph, cropped down to Prince’s face, as the raw material for sixteen Prince Series works. One of those works, “Purple Prince,” ran as an illustration to the Vanity Fair article, titled Purple Fame (see Figure 3).37

FIGURE 3. warhol’s purple prince as it appeared in vanity fair

What use did Warhol make of Goldsmith’s photograph in creating his Prince Series works? We learn something on that point in Justice Kagan’s dissent, which details the artist’s process:

Warhol cropped the photo, so that Prince’s head fills the whole frame: It thus becomes disembodied, as if magically suspended in space . . . . Warhol converted the cropped photo into a higher-contrast image, incorporated into a silkscreen. That image isolated and exaggerated the darkest details of Prince’s head; it also reduced his natural, angled position, presenting him in a more face-forward way. Warhol traced, painted, and inked, as earlier described.38 He also made a second silkscreen, based on his tracings; the ink he passed through that screen left differently colored, out-of-kilter lines around Prince’s face and hair . . . . Altogether, Warhol made 14 prints and two drawings—the Prince series—in a range of unnatural, lurid hues.39

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On April 21, 2016, Prince passed away at the age of fifty-seven.40 Later that month, Condé Nast, Vanity Fair’s corporate parent, reprinted a different work in Warhol’s Prince Series, Orange Prince (see the work on the left in Figure 4), as the cover for a special issue commemorating Prince’s life (see the cover on the right in Figure 4). Condé Nast paid the Warhol Foundation ten thousand dollars for a license to the work.41 Condé Nast did not seek a license from Goldsmith.42

FIGURE 4. warhol’s orange prince (left); orange prince as it appeared on the cover of the condé nast commemorative issue (right)