David, I was interested in this case, and after reading the opinion could see why the majority reached its decision. But Kagan made good points of her own.
Your recap was very helpful in summarizing the key aspects of this case and its possible impact on copyrights.
The 4th factor has a gravitational pull on the 1st factor for good reason. Suppose we view the first factor as being whether the use was transformative (It's not, as written--it's about context of use, not how it's modified, but I guess courts have ruled otherwise). How do we know how much something has changed, has been "transformed"? --we look at how good a substitute it is for the original. How can we tell how good a substitute it is? -- by how much people would pay to use the original instead of the transformed version. How do we measure how good a substitute it is? -- by lookinging at the cross-elasticity of demand, a single number, defined as the percentage the quantity of Goldsmith demanded would rise if the price of Warhol were to rise. Suppose the image prices are the same. If we think that Warhol's use is radically transformative, then if Warhol prices rise 10%, the quantity of Goldsmith's sold wouldn't change at all-- 0%-- so the elasticity would be 0/10 = 0. If we think that when Warhol prices rise 10%, the quantity of Goldsmith's sold would rise 50%, the elasticity would be 50/10 = 5. That's a very big cross-elasticity, so we should think that the two products are very very similar. Cross-elasticities are much used in antitrust law, for deciding when two companies are in the same market, so judges can handle them.
This cannot be taken as a blanket rule for the first factor, precisely because it is so close to the fourth, impact on profits, factor, but it's a useful way to start. We have to add a second of thinking why the elasticity is so big. It could be, for example, that Goldsmith loses his entire market because Warhol is simply better. It could be it is better just because Warhol has added color and people like that, which isn't really transformative. If hypothetically, Warhol also redrew the entire photo, bit by bit, using a photo editor, and made it a much better depiction of the person in the image, then it would be transformative. It would still kill Goldsmith sales-- and it could even be that Goldsmith having taken a photo was a *necessary condition* for Warhol's improved version--- but public policy should allow Warhol to sell his version just as it allows someone to start with a patented machine and use it to design a superior machine which kills sales of the first one.
I'm wondering about "Cases and Controversies" here. The parties asked the Supreme Court to rule on one legal issue in their case. But that issue was not dispositive, or even imporant, to the outcome of their case. Goldsmith still wins, as you said. I don't see that the settlement amount would come out differently, regardless of what the Supreme Court said on this issue. I think they just thought it would be fun to go tot he Supreme Court. And the Supreme Court thought it would be fun to rule on it.
To be sure, this *is* an important legal question in an unclear area of the law. If the Supreme Court were in the business of sua sponte choosing issues, it would be a good one. I just wonder about the jurisprudence here.
And thus the youngsters among your readership are surprised to learn that you are a great lawyer as well as a great journalist/blogger. Bravo.
David, I was interested in this case, and after reading the opinion could see why the majority reached its decision. But Kagan made good points of her own.
Your recap was very helpful in summarizing the key aspects of this case and its possible impact on copyrights.
Thank you.
The 4th factor has a gravitational pull on the 1st factor for good reason. Suppose we view the first factor as being whether the use was transformative (It's not, as written--it's about context of use, not how it's modified, but I guess courts have ruled otherwise). How do we know how much something has changed, has been "transformed"? --we look at how good a substitute it is for the original. How can we tell how good a substitute it is? -- by how much people would pay to use the original instead of the transformed version. How do we measure how good a substitute it is? -- by lookinging at the cross-elasticity of demand, a single number, defined as the percentage the quantity of Goldsmith demanded would rise if the price of Warhol were to rise. Suppose the image prices are the same. If we think that Warhol's use is radically transformative, then if Warhol prices rise 10%, the quantity of Goldsmith's sold wouldn't change at all-- 0%-- so the elasticity would be 0/10 = 0. If we think that when Warhol prices rise 10%, the quantity of Goldsmith's sold would rise 50%, the elasticity would be 50/10 = 5. That's a very big cross-elasticity, so we should think that the two products are very very similar. Cross-elasticities are much used in antitrust law, for deciding when two companies are in the same market, so judges can handle them.
This cannot be taken as a blanket rule for the first factor, precisely because it is so close to the fourth, impact on profits, factor, but it's a useful way to start. We have to add a second of thinking why the elasticity is so big. It could be, for example, that Goldsmith loses his entire market because Warhol is simply better. It could be it is better just because Warhol has added color and people like that, which isn't really transformative. If hypothetically, Warhol also redrew the entire photo, bit by bit, using a photo editor, and made it a much better depiction of the person in the image, then it would be transformative. It would still kill Goldsmith sales-- and it could even be that Goldsmith having taken a photo was a *necessary condition* for Warhol's improved version--- but public policy should allow Warhol to sell his version just as it allows someone to start with a patented machine and use it to design a superior machine which kills sales of the first one.
I'm wondering about "Cases and Controversies" here. The parties asked the Supreme Court to rule on one legal issue in their case. But that issue was not dispositive, or even imporant, to the outcome of their case. Goldsmith still wins, as you said. I don't see that the settlement amount would come out differently, regardless of what the Supreme Court said on this issue. I think they just thought it would be fun to go tot he Supreme Court. And the Supreme Court thought it would be fun to rule on it.
To be sure, this *is* an important legal question in an unclear area of the law. If the Supreme Court were in the business of sua sponte choosing issues, it would be a good one. I just wonder about the jurisprudence here.