Penguin Random House LLC v. Colting

Citation: 270 F. Supp. 3d 736Docket: 17-CV-386 (JSR)

Court: District Court, S.D. New York; September 7, 2017; Federal District Court

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On January 19, 2017, Penguin Random House LLC and other plaintiffs filed a lawsuit against Fredrik Colting and Melissa Medina, alleging nine counts of copyright infringement. The plaintiffs hold copyrights to four notable novels: "Breakfast at Tiffany’s," "The Old Man and the Sea," "On the Road," and "2001: A Space Odyssey." The defendants published illustrated children's books titled "KinderGuides," which present simplified summaries of these novels. Following discovery, the plaintiffs sought summary judgment on liability, while the defendants cross-moved for their own summary judgment and invoked a fair use defense. On July 28, 2017, the court granted summary judgment to the plaintiffs on all infringement counts and dismissed the fair use defense. However, the court allowed the defendants to introduce an advice of counsel defense regarding willfulness, leading the plaintiffs to withdraw their summary judgment motion on that issue. A trial is scheduled for October 2, 2017, to address the remaining matters. The court noted that the plaintiffs owned valid copyrights and that the "KinderGuides," designed to introduce the novels to children, prominently featured the original titles and authors. The Guides were published around September 22, 2016, as part of a planned series of 50 books.

The document includes a "Table of Contents" on pages seven and eight, an illustration of the original author on page nine, and an "About the Author" section on page ten. Following these are several pages of "Story Summaries," succeeded by back-pages with sections on "Main Characters," "Key Words," "Quiz Questions," and "Analysis." Defendants acknowledge they accessed plaintiffs’ Novels while preparing their Guides, relying on them significantly. A side-by-side comparison reveals that the Guides closely mirror the Novels in terms of plots, settings, and characters, often including specific details from the Novels. Notable examples include shared elements from "Breakfast at Tiffany’s," "On the Road," "2001: A Space Odyssey," and "The Old Man and the Sea." While some elements from the Novels do not appear in the Guides, all fundamental plot lines, characters, and settings from the Guides originate in the Novels. It is established that a market exists for children’s books based on adult novels, and copyright holders typically publish or license children’s adaptations. However, defendants did not seek permission for their children's guides, and plaintiffs have not authorized anyone to publish children’s versions of their Novels. Notably, the Hemingway estate rejected requests for a children’s version of "The Old Man and the Sea," and Penguin Random House declined to authorize a children’s version of "2001: A Space Odyssey," although they permitted an ESL version. The Capote estate allowed an illustrated children’s version of "A Christmas Memory" but not for "Breakfast at Tiffany’s." The legal standards for summary judgment are outlined, indicating that such judgment is appropriate only when there are no genuine material facts in dispute and the moving party is entitled to judgment as a matter of law.

The court is required to interpret facts in favor of the non-moving party, as established in Castle Rock Entm’t, Inc. v. Carol Pub. Grp. Inc. Under the Copyright Act of 1976, copyright owners have exclusive rights, including reproduction and creation of derivative works. Plaintiffs allege that defendants’ Guides infringe these rights, necessitating proof of three elements: (1) valid ownership of copyrights, (2) actual copying of their works by defendants, and (3) substantial similarity between the works. Additionally, for claims of unauthorized derivative works, plaintiffs must demonstrate that the defendants’ works fall under 17 U.S.C. 106(2).

Plaintiffs assert valid ownership, supported by undisputed registration certificates, which serve as prima facie evidence of copyright ownership and protection of fictional characters, including Holly Golightly from Breakfast at Tiffany’s. To establish actual copying, plaintiffs may use direct or indirect evidence. Here, defendants acknowledged reading plaintiffs' Novels and displaying their titles, which legally constitutes actual copying. 

Finally, once actual copying is established, plaintiffs must show that the copying was unlawful by demonstrating substantial similarity to protected expressions in their works, as outlined in case law.

Plaintiffs must demonstrate that the copying of their work is both quantitatively and qualitatively substantial to establish copyright infringement. The qualitative aspect requires that the copied expression is protected, while the quantitative aspect necessitates that the copying exceeds a trivial amount. Courts utilize various tests to evaluate substantial similarity, particularly when the works appear distinct. For non-textual works, the "ordinary observer" test is applied, while textual works may be assessed using the "fragmented literal similarity test" for direct quotations or close paraphrases. In cases lacking word-for-word similarity, the "comprehensive non-literal similarity" test evaluates the overall concept and feel of the works.

In the current case, these tests are unnecessary as the defendants’ Guides are closely based on the plaintiffs’ Novels, aiming to introduce the stories to children. Defendants assert that elements such as characters and plots from the plaintiffs’ works are unprotected "fictional facts" rather than copyrightable expression, arguing that their Guides merely summarize these facts. However, the law distinguishes between independently existing facts and fictional details created by authors, with the latter being copyrightable. The Second Circuit affirms that characters and events born from an author's imagination qualify as protectable creative expression.

The Copyright Act safeguards both the literal text and the fictional facts created by authors, distinguishing between "discovered facts" that lack copyright protection and "created facts" that are considered original expressions. Defendants assert that characters in plaintiffs’ works are merely unprotectable stock characters, citing examples from familiar literature. However, copyright law protects characters that are sufficiently unique and delineated, as illustrated by case law. The defendants' works allegedly appropriate not just general character types but also specific details from the plaintiffs’ copyrights, demonstrating intentional copying. For instance, their adaptation of "Breakfast at Tiffany’s" features the distinctive character Holly Golightly, while their guide to "On the Road" centers on the unique character Dean alongside Sal. Additionally, defendants claim that the plots of the plaintiffs’ novels are merely unprotectable standard tropes, arguing that elements common to certain story types, such as "man versus nature," are not copyrightable. They overlook the crucial distinction that while broad plot ideas are not protected, specific plot expressions are.

In Stodart v. Mut. Film Corp., the court found two plots to be substantially similar, which pertains to the evaluation of copyright infringement. The distinction between types of similarity is elaborated in Nichols and Williams v. Crichton. Defendants’ Guides do not merely share plot elements but retell the same stories, featuring identical characters, incidents, settings, and plot twists from the original Novels. While not every detail is copied, the legal standard states that a lack of complete replication does not excuse infringement, as established in Sheldon v. Metro-Goldwyn Pictures Corp. Additionally, copyright infringement does not require the same "feel" or effect as the original work, supported by cases like Castle Rock and Twin Peaks Prods., where derivative adaptations were found infringing despite their different formats. The defendants' Guides significantly replicate themes, characters, plots, sequences, and settings of the plaintiffs’ Novels, and the defendants admit their intention to remain true to the original works. 

Plaintiffs also assert that the Guides infringe their right to control derivative works under 17 U.S.C. § 106(2). A derivative work is defined as one based on preexisting works but must be substantially transformed or adapted to qualify as derivative. The case law indicates that not all adaptations, such as book reviews or parodies, are considered derivative. Whether a guide constitutes a derivative work hinges on whether it alters the copyrighted material enough to no longer represent the original authorship.

The Second Circuit determined that a guide to "Twin Peaks," which merely transformed the original work into a different medium, constituted a derivative work. In contrast, an encyclopedia about the Harry Potter universe was not deemed a derivative work since it did not retell the original stories but reorganized existing material for a new purpose. The Lexicon provided a reference guide to individual elements of the Harry Potter world without retelling the story. However, the defendants' Guides, despite including brief analyses and quiz questions, primarily retell the plaintiffs' stories through "Story Summaries," making them derivative works akin to translations or adaptations. Since the defendants lacked permission to produce these Guides, they are classified as unauthorized derivatives and infringe upon the plaintiffs' exclusive rights to reproduce their works and create derivative works.

The defendants claim their Guides are protected by the fair use doctrine, which allows limited use of copyrighted material without consent. Fair use is evaluated based on four factors: (1) the purpose and character of the use (commercial vs. nonprofit), (2) the nature of the copyrighted work, (3) the amount and substantiality of the material used, and (4) the impact on the market value of the original work. These factors must be considered collectively, not in isolation, to align with the constitutional intent of copyright law to promote progress in arts and sciences. Courts may rule on fair use as a matter of law if no genuine issues of material fact exist.

The doctrine of fair use allows for the utilization of existing works in ways not typically authorized by their copyright owners, specifically for purposes such as criticism and commentary. This principle is crucial for academic freedom and critical debate, enabling analysis of works without needing prior approval from authors or publishers. However, the right to create derivative works remains exclusive to copyright holders. The central issue in this case is whether illustrated children's guides to adult novels are permissible under fair use or fall under the exclusive rights of copyright holders.

In assessing fair use, the first factor to consider is the purpose and character of the use, particularly if it is commercial or nonprofit educational. Transformative use, which adds new expression or meaning, is crucial in this evaluation. The defendants claim their guides are transformative for three reasons: they abridge the novels, adapt them for a younger audience by removing adult themes, and add analytical content. However, the court finds these alterations insufficient to establish a fair use defense. U.S. law does not protect abridgements as fair use, as they are considered derivative works exclusively reserved for copyright holders. Modifying the novels by removing adult themes does not constitute a meaningful transformation, similar to how an airline's editing of films does not exempt it from royalty obligations. The guides are viewed as a means to convey the original stories without producing new insights, ultimately affirming the copyright holders' exclusive rights.

Defendants' Guides are assessed for their qualification as educational criticism or commentary, a key component for establishing transformative use in fair use defenses. While defendants argue that the inclusion of analysis, quiz questions, and background information supports their claim of educational intent, merely adding these elements does not shield the Guides from infringement. The law mandates that any reproduction of protected expression must serve a transformative commentary purpose, and significant copying beyond what is necessary for commentary undermines fair use protection.

Defendants' summaries of the plaintiffs' Novels serve to bolster their claim for fair use rather than provide genuine literary analysis. Their admissions in court indicate that the additional sections were specifically designed to support their fair use argument, suggesting a lack of genuine transformation. Consequently, the Guides do not legally transform the Novels, leading to a strong favoring of the plaintiffs based on the commercial nature of the Guides.

The second factor in the fair use inquiry, concerning the nature of the copyrighted work, also favors plaintiffs. Since the Novels are creative works, they receive heightened copyright protection compared to factual works. 

The third factor evaluates the amount and substantiality of the use and emphasizes that the extent of copying must relate to the transformative purpose. In this case, most of the Guides focus on retelling the plaintiffs' stories, with minimal analytical content, indicating that the copying exceeds what is necessary for commentary. Therefore, this factor also favors plaintiffs.

The excerpt addresses the fourth factor of the fair use analysis concerning the "effect of the use upon the potential market for or value of the copyrighted work." Under 17 U.S.C. 107(4), plaintiffs do not need to demonstrate an actual decline in sales to negate fair use; it suffices to show that widespread use of the challenged work would adversely impact the market for the original work or its derivatives. Defendants claim their Guides do not affect the market for the plaintiffs’ Novels, arguing that consumers would not choose illustrated children’s books over classic literature. However, the burden lies with the defendants to prove no adverse market effect exists. Both parties agree there is a market for children’s adaptations of adult novels, and plaintiffs have provided evidence of publishers exploiting this market. 

Defendants also assert that plaintiffs have never created or marketed works similar to theirs, but this does not negate the potential for plaintiffs to enter that market in the future. If the defendant's work negatively impacts any of the rights in the copyrighted work, such as adaptation rights, the use is not fair. Since children’s books fill a market niche that plaintiffs could potentially develop, the fourth factor leans in favor of the plaintiffs.

Furthermore, the Court must consider additional factors relevant to fair use, including the broader constitutional intent of copyright law to promote progress in the arts and sciences. Defendants argue that protecting their works serves this purpose, as copyright law aims to incentivize creativity while allowing public access after the exclusive control period. The defendants request the Court to weigh public interest against the specifics of this case.

Plaintiffs are the heirs, trusts, and estates of authors, not the authors themselves, and they have not published or intend to publish illustrated children’s books based on their Novels. Defendants argue that plaintiffs aim to stifle the creation of new works rather than preserve or license their own, contending that plaintiffs’ motives do not align with the constitutional purpose of copyright, which is to promote progress in the arts and sciences. The Court indicates that it cannot apply a different fair use analysis based on whether copyright holders plan to exploit their rights for derivative works. The Copyright Act does not establish a use-it-or-lose-it rule; copyright holders retain exclusive rights to exploit derivative works regardless of their intent to do so. The argument that the Copyright Act is unconstitutional is noted, as defendants assert that its provisions have expanded over time without proper justification. However, for the Copyright Act to be constitutional, Congress must have had a rational basis for granting exclusive rights to advance the arts and sciences. The Court emphasizes that it cannot question Congress’s policy decisions unless it is shown that Congress lacked a rational basis for its actions. As defendants fail to demonstrate this lack of rationality regarding the exclusive rights granted to plaintiffs, the Court cannot grant the relief sought by the defendants.

Defendants’ Guides are deemed unauthorized derivative works that do not primarily engage in critique or parody of plaintiffs’ novels but instead reproduce plaintiffs' original content in a different format. The court determined that no reasonable jury could find in favor of the defendants. Consequently, on July 28, 2017, the court granted summary judgment to the plaintiffs for all nine counts of infringement and dismissed the defendants' fair use defense as a matter of law. The Clerk of the Court was instructed to close motions at docket entries 21, 22, and 27. The court found the issue of whether the Guides are derivative works to be irrelevant, as infringement of the adaptation right also infringes the reproduction right, referencing Twin Peaks Prods. Inc. v. Publications Int’l, Ltd. The court noted that the transformative nature of a work is distinct from its commercial nature, which, while not decisive, generally favors copyright holders. It was acknowledged that plaintiffs have released an ESL version of "2001: A Space Odyssey," directly competing with the defendants’ Guide in the same ESL market.