<b>Decision of Note</b> <b>Web Streaming of Film Clips Not Fair Use</b>

That the Disney films at issue – including “Beauty and the Beast,” “Fantasia” and “Pretty Woman” – were creative works also helped Disney. But the amount and substantiality of what Video Pipeline copied weighed in that company's favor because it was a small part of the full-length films and didn't borrow the heart of those movies.

The appeals court then ruled that the impact of Video Pipeline's clips on Disney's licensing of its own trailers would be to serve as a market replacement.

Finally, the appeals court concluded that Disney's licensing agreements, which prohibit uses “derogatory to or critical of” the entertainment industry or Disney, weren't a copyright misuse. According to the court, “[W]e … cannot conclude on this record that the agreements are likely to interfere with creative expression to such a degree that they affect in any significant way the policy interest in increasing the public store of creative activity. … There is no evidence that the public will find it any more difficult to obtain criticism of Disney and its interests, or even that the public is considerably less likely to come across this criticism, if it is not displayed on the same site as the trailers.”

The U.S Court of Appeals for the Third Circuit decided that the unlicensed streaming on the Internet of two-minute clips from Walt Disney films didn't constitute fair use. Video Pipeline Inc. v. Buena Vista Home Entertainment Inc., 02-2497.

Video Pipeline had filed for a declaratory judgment. The district court entered summary judgment in favor of Disney, including on its copyright infringement counterclaim. The Third Circuit noted that neither side had informed the district court that Video Pipeline was appealing an earlier entry of a preliminary injunction. (“By continuing to litigate the case in the District Court after the appeal was taken and by failing to inform either Court of the ongoing actions of the other, counsel risked a needless waste of judicial resources as well as the resources of their clients,” the appeals court complained.)

Affirming the preliminary injunction, the appeals court first found that, under Sec. 107 of the Copyright Act, Video Pipeline's purpose and character of use weighed against a fair-use finding because Disney's trailers and Video Pipeline's clips served the same function. Video Pipeline's making of the clips didn't add new expression, the appeals court emphasized.

That the Disney films at issue – including “Beauty and the Beast,” “Fantasia” and “Pretty Woman” – were creative works also helped Disney. But the amount and substantiality of what Video Pipeline copied weighed in that company's favor because it was a small part of the full-length films and didn't borrow the heart of those movies.

The appeals court then ruled that the impact of Video Pipeline's clips on Disney's licensing of its own trailers would be to serve as a market replacement.

Finally, the appeals court concluded that Disney's licensing agreements, which prohibit uses “derogatory to or critical of” the entertainment industry or Disney, weren't a copyright misuse. According to the court, “[W]e … cannot conclude on this record that the agreements are likely to interfere with creative expression to such a degree that they affect in any significant way the policy interest in increasing the public store of creative activity. … There is no evidence that the public will find it any more difficult to obtain criticism of Disney and its interests, or even that the public is considerably less likely to come across this criticism, if it is not displayed on the same site as the trailers.”