Today's Google Books decision breaks no new ground in terms of transformativeness. It is perhaps most interesting in its finessing of the question "what is a derivative work?" while suggesting that the answer may be a functional one based on similarity to the statutory list, as Pam Samuelson has argued in her own work.
I was most struck by two related comments on factor four, which the court deemed the most important factor--perhaps a retreat from earlier post-Campbell cases--albeit one that had to be understood in light of factor one. (The court didn't repeat the Second Circuit's previous statements that copyright owners can't create market harm by being willing to license transformative uses, but such repetition wasn't required.) Though factor four is the most important, there are limits on its scope:
Lost sales must be substantial to make the fourth factor weigh against a transformative fair use:
But the possibility, or even the probability or certainty, of some loss of sales does not suffice to make the copy an effectively competing substitute that would tilt the weighty fourth factor in favor of the rights holder in the original. There must be a meaningful or significant effect “upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107(4).. . .
Also, lost sales must be based on protectable aspects of the work to count:
By entering “Roosevelt polio” in a Google Books search, the student would be taken to (among numerous sites) a snippet from page 31 of Richard Thayer Goldberg’s The Making of Franklin D. Roosevelt (1981), telling that the polio attack occurred in 1921. This would satisfy the searcher’s need for the book, eliminating any need to purchase it or acquire it from a library. But what the searcher derived from the snippet was a historical fact. Author Goldberg’s copyright does not extend to the facts communicated by his book. It protects only the author’s manner of expression. Google would be entitled, without infringement of Goldberg’s copyright, to answer the student’s query about the year Roosevelt was afflicted, taking the information from Goldberg’s book. The fact that, in the case of the student’s snippet search, the information came embedded in three lines of Goldberg’s writing, which were superfluous to the searcher’s needs, would not change the taking of an unprotected fact into a copyright infringement.
Even if the snippet reveals some authorial expression, because of the brevity of a single snippet and the cumbersome, disjointed, and incomplete nature of the aggregation of snippets made available through snippet view, we think it would be a rare case in which the searcher’s interest in the protected aspect of the author’s work would be satisfied by what is available from snippet view, and rarer still—because of the cumbersome, disjointed, and incomplete nature of the aggregation of snippets made available through snippet view—that snippet view could provide a significant substitute for the purchase of the author’s book.