4th Circuit Holds Archiving Of Students’ Submitted, Copyrighted Materials For Future Use In Detection Of Plagiarism Is A Fair Use Under 17 U.S.C. §107

In A.V. v. iParadigms, LLC, 562 F.3d 630 (4th Circ., 2009), the plaintiffs’ alleged that iParadigms’ use of the plaintiffs’ copyrighted materials infringed the plaintiffs’ rights in the copyrighted materials.  iParadigms counterclaimed that plaintiff A.V.’s unauthorized access to iParadigms’ computer system violated the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. §1030, and the Virginia Computer Crimes Act (VCCA), Va. Code Ann. §18.2-152.3.  On summary judgment, the district court found in favor of iParadigms on the copyright infringement claims and found in favor of the plaintiff A.V. on the CFAA and VCCA claims.  The 4th Circuit affirmed the district court’s decision with respect to the copyright infringement claims and reversed and remanded for further consideration iParadigms’ CFAA and VCCA claims.

Plaintiffs A.V., K.W., E.N., and M.N., each of which are minors and represented by respective next friends, brought this action against iParadigms for copyright infringement of essays and papers submitted thereto.  iParadigms owns and operates “Turnitin Plagiarism Detection Service,” which is an online technology system, operated via http://www.turnitin.com, through which students submit assigned writings to their teachers.  In order for a student to submit a paper through the website, the student “must be enrolled in an active class,” “enter the class ID number and class enrollment password,” and create a user profile on the website. In creating a user profile, the student must click on “I Agree” under the “terms of agreement” or “Click-wrap Agreement,” which provides that the offered services are conditioned upon the student’s unmodified acceptance of the terms of the agreement and that iParadigms is not liable for any damages arising out of use of the website.  Upon submission of a paper or assignment, the service provides a digital comparison of the student’s work with content on the internet, commercial databases of journal articles and periodicals, and “student papers previously submitted to Turnitin[.]”  The Turnitin system then generates an “Originality Report,” which indicates possible plagiarism, and forwards the student’s work along the Originality Report to the student’s teacher.  Participating schools are given the option of “archiving” student works in a database for future use to be compared with future submitted works.  Such “archived” student works are stored as digital code and not read or reviewed by employees of iParadigms. 

Upon filing of this suit, plaintiffs A.V., K.W., E.N., and M.N. were students at high schools that subscribed to the Turnitin program and elected to have students’ works archived for future use.  Such schools required students to submit works via http://www.turnitin.com to receive credit such that failure to do so would result in a grade of “zero” for that assignment.  K.W., E.N., and M.N. each submitted papers to their teachers via http://www.turnitin.com with a disclaimer objecting to the archiving of their works; however, their works were archived because of their schools’ enrollment in the archival program.  A.V. submitted works using a password designated for students of theUniversityofCalifornia, San Diego (UCSD), which was obtained via an internet search and provided to A.V. by plaintiffs’ counsel.  Before each of the assignments at issue was submitted, plaintiffs’ counsel applied for and was granted a copyright registration. 

The plaintiffs alleged that iParadigms archiving of their works in the Turnitin database without their permission infringed their copyright interests.  As a result of A.V.’s submissions, iParadigms counterclaimed under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. §1030, and the Virginia Computer Crimes Act (VCCA), Va. Code Ann. §18.2-152.3.  The district court granted summary judgment and found that the students and iParadigms entered into a binding agreement upon the students’ clicking on “I Agree,” that the agreements shielded iParadigms from liability arising from the plaintiffs’ use of the Turnitin.com website, and that the plaintiffs’ written disclaimers did not modify the Agreement or render it unenforceable.  The district court further held that iParadigms’ use of the plaintiffs’ written submission qualified as “fair use” under 17 U.S.C.§ 107, and therefore, did not constitute infringement specifically because the use was transformative as its purpose was to prevent plagiarism by comparative use and that the use did not impair the market value for the students’ works.  With regard to iParadigms’ counterclaims, the district court rejected such on summary judgment stating that iParadigms failed to provide evidence of actual or economic damages as a result of the alleged CFAA and VCCA violations. 

The ownership rights created by the Copyright Act are not absolute such that, while exclusive, such rights are “limited in that a copyright does not secure an exclusive right to the use of fact, ideas, or other knowledge.” Slip at pages 7-8, quoting Bond v. Blum, 317 F.3d 385, 394 (4th Cir. 2003).  Further, copyright protections are subject to enumerated exceptions explicit in the Copyright Act. One such exception at 17 U.S.C. §107 codifies the common-law doctrine of “fair use,” which “allows the public to use not only facts and ideas contained in a copyrighted work, but also the expression itself in certain circumstances.” quoting Eldred v. Ashcroft, 537 U.S. 186, 219 (2003).  “Courts have traditionally regarded ’fair use‘ of a copyrighted work as a privilege in others than the owner of the copyright to use the copyrighted material in a reasonable manner without his consent.”  Slip at pages 8-9, quoting Harper & Row, Publishers, Inc. v. Nation Enters., 471U.S. 539, 549 (1985) (internal quotes omitted).

17 U.S.C. § 107 states that “the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include-

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.”

The 4th Circuit analyzed each of the four nonexclusive factors in turn.

The Purpose and Character of the Use

Courts have stated that a use of a copyrighted work for commercial purposes tends to weigh against a finding of fair use, but that the profit/nonprofit distinction is not whether the sole motivation was monetary gain but whether the use exploits the copyrighted material without paying the customary price.  Harper & Row, 471 U.S. at 562.  Courts have further looked to whether the use at issue “merely supersedes the objects of original creation, or instead adds something new, with a further purpose or different character,” which indicates that courts should analyze “whether and to what extent the new work is transformative.”  Campbell v. Acuff-Rose Music, 510 U.S. 569, 578-79 (1994).  The more transformative a use is, the less important other factors, such as commercialism, become.  Id.  “A transformative use is one that employs the quoted matter in a different manner or for a different purpose from the original, thus transforming it.”  Slip at 10, quoting Pierre N. Leval, Commentary, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1111 (1990) (internal quotes omitted).

The plaintiffs argued that the district court ignored the commercial nature of iParadigms’ use of their copyrighted material noting that iParadigms is a for-profit company receiving millions of dollars in revenue based on the database of student works, that iParadigms’ use of their copyrighted material could no be transformative because the archiving process did not add anything to their works, and that, even if iParadigms’ use has a transformative purpose, the use itself is not transformative if it fails to effect such purpose, i.e., fails to prevent plagiarism.  The 4th Circuit rejected such arguments.  First, the 4th Circuit noted that since most secondary users seek at least some commercial gain, an emphasis on commercial exploitation would overly restrict the fair use doctrine; instead, commercial use should be weighed along with the other factors in fair use analysis.  Next, the 4th Circuit noted that a transformative use need not alter or augment the work to be transformative in nature, but that a transformative use may be transformative in function or purpose without altering or actually adding anything to the original work.  Finally, the 4th Circuit noted that, although the Turnitin system may be capable of only detecting the most ignorant or lazy attempts at plagiarism, whether a better detection system could be designed is of no import to the analysis of whether the disputed use serves a different purpose or function.  Therefore, the district court’s finding that the first factor weighed in favor of fair use was correct.

The Nature of the Copyrighted Work

The Supreme Court has stated that “fair use is more likely to be found in factual works than in fictional works” whereas “a use is less likely to be deemed fair when the copyrighted work is a creative product.”  Slip at page 14, quoting Stewart v. Abend, 495U.S. 207, 237 (1990).  The district court noted that iParadigms’ use fostered the development of original and creative works by deterring efforts at plagiarism by the students enrolled in the program. 

The plaintiffs argued that the district court ignored the fact that the students’ works were unpublished and that the district court ignored the fact that the students’ works were fiction and poetry, which are considered highly creative.  However, the 4th Circuit noted that although the district court may have omitted mentioning that the works were unpublished, the district court clearly did not ignore the unpublished nature of the works.  As evidence, the 4th Circuit noted that the district court quoted Bond v. Blum discussing fair use of unpublished works of fiction in concluding that iParadigms’ use was unconnected to any creative element in plaintiffs’ works.  Further, the 4th Circuit stated that it is clear that iParadigms’ use did not have the “intended purpose” or “incidental effect” of supplanting the plaintiffs’ rights to first publication because iParadigms did not publicly disseminate or display plaintiffs’ works, plaintiffs’ works were not seen by any third party other than the instructor to whom the work was submitted, and no employee of iParadigms read or reviewed the plaintiffs’ works.  Next, the 4th Circuit noted that the district court did take into consideration that the plaintiffs’ works were highly creative in nature but stated that iParadigms use was not related to the creative core of the plaintiffs’ works.  The 4th Circuit found no fault in the analysis of the district court with respect to the second factor and agreed that this factor weighed in support of neither the plaintiffs nor iParadigms. 

The Amount and Substantiality of the Work Used

Generally, the 4th Circuit noted, “as the amount of copyrighted material used increase, the likelihood that the use will constitute a fair use decreases.”  Slip at page 17, quoting Bond, 317 F.3d at 396.  But, such analysis additionally requires consideration of the “quality and importance” of the portion of the copyrighted material used, i.e., whether the portion used included “the heart of the copyrighted work.”  Id., quoting Cambell, 510 U.S. at 587, and Sundeman v. The Seajay Soc’y, Inc., 142 F.3d 194, 205 (4th Cir. 1998), respectively. 

The plaintiffs argued that the district court erred by referring to the transformative nature of iParadigms’ use in the amount and substantiality analysis of the third factor, i.e., that the district court improperly blended the third factor into the first factor.  The district court did indeed find that because the iParadigms’ use of the works was transformative in nature, iParadigms’ use of the entirety of the plaintiffs’ works did not preclude a finding of fair use such that this third factor weighed in support of neither the plaintiffs nor iParadigms.  The 4th Circuit noted that, in their view, the district court’s analysis did not merge the first and third factors and that the plaintiffs’ arguments failed to recognize the overlap that exists between the fair use factors.  As such, the 4th Circuit found no error in the district court’s analysis. 

The Effect of the Use

“The Supreme Court described this factor as the single most important element of fair use, Harper & Row, 471 U.S. at 566, considering that a primary goal of copyright is to ensure that authors [have] the opportunity to realize rewards in order to encourage them to create.” Slip at page 18, quoting Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. at 1124, (internal quotes omitted).  Such analysis under the fourth factor seeks to determine whether the iParadigms’ use of the plaintiffs’ works “would materially impair the marketability of the work[s] and whether it would act as a market substitute” for them.  Id. quoting Bond, 317 F.3d at 396.  The focus of such analysis is upon whether the secondary use “usurps the market of the original work.”  Id., quoting NXIVM Corp. v. The Ross Institute, 364 F.3d 471, 482 (2nd Cir. 2004).  An adverse effect on the market of the original work does not preclude the finding of a fair use.  Id.  The 4th Circuit specifically noted that this fourth factor overlaps to some extent with the question of whether the use was transformative in nature because the more transformative the use, the less likely the secondary use would supplant or supersede the original work.  The district court concluded that iParadigms’ use did not serve as a market substitute or harm the market value of the works as such were admitted in depositions by the plaintiffs. 

The plaintiffs argued that they could be harmed in the future by the Turnitin system upon submission to third parties of works previously submitted to the Turnitin system if such third parties, for example, college admissions and periodicals, use the Turnitin system to verify originality.  Further, the plaintiffs argued that the district court erred by focusing on lack of evidence of actual damages instead of considering the effect of iParadigms’ use on the “potential market” for plaintiffs’ works.  The 4th Circuit first noted that, based on how the Turnitin system works, the likelihood of harm to plaintiffs’ was speculative at best and dismissed the plaintiffs’ first argument.  In response to the plaintiffs’ second argument, the 4th Circuit found that the district court did consider the potential market effects and concluded that the plaintiffs’ arguments were theoretical and speculative.  iParadigms’ use would impair the sale of the students’ works to other high school students who wish to purchase such papers and submit them as their own, but the plaintiffs testified that they would not sell the works because such a transaction would be dishonest and make them a party to cheating.  As such, iParadigms’ use does not create a market substitute as iParadigms’ use does not supplant the plaintiffs’ works in the “paper mill” market, but merely suppresses demand for them by keeping a record that such works were previously submitted. 

The 4th Circuit concluded that, in viewing the evidence in the light most favorable to the plaintiffs’, iParadigms’ use was a fair use under the Copyright Act such that iParadigms was entitled to summary judgment on the copyright infringement claim. 

iParadigms’ Cross Appeal of CFAA and VCCA Counterclaims

iParadigm counterclaimed against plaintiff A.V. because of A.V.’s accessing the Turnitin system via a password assigned to USCD students and alleged that A.V.’s unauthorized access to Turnitin violated 18 U.S.C. §1030(a)(5)(iii), which prohibits any person from “intentionally access[ing] a protected computer without authorization, and as a result of such conduct, caus[ing] damage,” and, by such conduct, cause, in violation of 18 U.S.C. §1030(a)(5)(B)(i), “loss to 1 or more persons during any 1-year period … aggregating at least $5,000 in value.”  Slip at page 23.  The CFAA further imposes that such damages are limited to economic damages.  iParadigms offered evidence that, upon learning of the unauthorized access to the Turnitin system, iParadigms was fearful of a technical glitch and assigned several employees to determine what had happened.  The district court concluded that iParadigms failed to produce evidence of any actual or economic damages and, instead, only presented evidence of consequential damages, i.e., economic damages does not encompass consequential damages. 

iParadigms argued that “economic damages” should be given its ordinary meaning, which includes consequential damages to the exclusion of recovery for pain and suffering or emotional distress.  The 4th Circuit agreed that the district court’s interpretation was too narrow and concluded that the wording of 18 U.S.C. §1030 plainly included consequential damages of the type sought by iParadigms.  As such, the 4th Circuit reversed the district court’s decision and remanded this issue for further consideration of iParadigms’ CFAA claims. 

iParadigms further alleged that A.V.’s unauthorized access to Turnitin violated the VCCA, which provides that “[a]ny person who uses a computer or computer network, without authority and … [o]btains property or services by false pretenses … is guilty of the crime of computer fraud.” Slip at page 25, quoting Va. Code Ann. §18.2-152.3.  Further, the VCCA states that “any person whose property or person is injured by reason of a violation of [the VCCA] … may sue thereof and recover any damages sustained and the costs of the suit.”Va. Code Ann. §18.2-152.12.  The district court granted A.V. summary judgment on the basis that iParadigms had failed to provide evidence of actual or economic damages. 

iParadigms argued that the district court narrowly construed “any damages” to exclude consequential damages.  The 4th Circuit found nothing in the statute to suggest that consequential damages were unavailable under the VCCA, and thus, reversed the district court’s decision and remanded this issue for further consideration of iParadigms’ VCCA claims. 

The 4th Circuit found that iParadigms’ secondary use of archiving for future use of the students’ submitted, copyrighted materials did not constitute copyright infringement because iParadigms’ use was a “fair use,” mainly because iParadigms’ use was transformative in nature and did not usurp the plaintiffs’ potential market for the plaintiffs’ works.  Further, the 4th Circuit remanded for further consideration iParadigms’ counterclaims against plaintiff A.V. under the CFAA and the VCCA.


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