There's no cushioning this blow: Comparative advertising is copyright fair use

Ashley Furniture Industries, Inc. v. American Signature, Inc., 2014 WL 11320708, No. 11–cv–427 (S.D. Ohio June 25, 2014)

 

This 2014 case just showed up in my Westclip search and is worth noting for adding to the small but consistent body of case law holding that comparative advertising is a recognized category of copyright fair use.  Defendant Value City, a furniture seller that competed with Ashley, ran various web and email ads, and used handouts/newspaper inserts, comparing its products to those of Ashley by using Ashley’s own photos of its furniture, taken from Ashley’s website, next to photos of Value City’s furniture.  Value City it also used a point of sale display containing a printout from Ashley’s website to tout the comparative virtues of the furniture physically present in the Value City stores.

Point of sale display with Ashley printout

Web/email ad with Ashley photo

In a deeply anticompetitive suit, Ashley sued for copyright infringement (and unfair competition/trademark infringement, not addressed here), arguing among other things that the price comparisons were untrue/misleading; that the products weren’t truly comparable because of Ashley’s higher quality; and that consumers were misled into thinking that Value City was selling Ashley-made furniture, in part because the only brand name in the ads was Ashley’s.  Initially, Ashley sued (without copyright claims) in Chicago, but the judge expressed skepticism about the claims and Ashley dismissed the Chicago suit without prejudice.  It then registered its copyrights in the product photos used by Value City and sued again, first only for copyright infringement, then re-adding the additional claims.

 

Ashley initially argued that Value City’s use couldn’t be fair because its comparative ads were false and deceptive, making the purpose and character of the use wrongful.  Dastar, however, cautions against grafting Lanham Act principles into copyright law, creating a mutant.  Although courts have referred to deception when addressing fair use in copyright cases, Sony Computer Entm’nt Am. v. Bleem, 214 F.3d 1022, 1027 (9th Cir.2000); Triangle Publ’ns, Inc. v. Knight–Ridder Newspapers, Inc., 626 F.2d 1171, 1176 n.13 (5th Cir.1980), “it would be improper to materially alter the four-factor test by creating a dispositive, threshold inquiry for falsity and deception.”

 

Factor one: courts have held that truthful comparative advertising is in the public interest, even though it’s commercial.  The court here reasoned that “when comparative advertising is truthful and not a passing off of the copyrighted work, it serves the public interest and ameliorates the negative effect of commercial use on a finding of fair use,” although Bleem and Triangle treated this factor somewhat differently—Bleem actually allowed the comparative nature of the advertising to favor a finding of fair use.  As for truthfulness: Value City didn’t represent to consumers that the photos of Ashley’s furniture were Value City’s, and even included Ashley’s trademarks with some photos, indicating that there was no attempt to pass the photos off as having been created by Value City.

 

For purposes of a copyright claim, the only relevant passing off would be of the copyrighted works.  “Very simply, copyright law protects Ashley’s photographs, not Ashley’s interest in selling the sofas depicted in the photos. As such, passing off in this context would entail Value City’s sale of copies of Ashley’s photographs as its own, which did not occur.”  Both Bleem and Triangle involved comparisons of copyrightable works that were the underlying products, not separate, underlying products.  “Applying Lanham Act principles [relevant to the underlying furniture] to evaluate Ashley’s copyright claim would run afoul of the Supreme Court’s admonition against doing so in Dastar.” Thus, “allegations that Value City’s comparative advertisements did not disclose differences in the quality of the furniture, contained inaccuracies as to pricing, and led some consumers to believe that Value City was selling Ashley sofas are actionable, if at all, under the Lanham Act, not the Copyright Act.”

 

Thus, “the comparative nature of Value City’s advertisements, which provided some benefit to consumers, reduces or negates the impact of commercial use on the first statutory factor.”  Further, the use of Ashley’s photos as components of comparative ads was transformative.  The comparative ads had a different purpose than the original images: they contained an invitation to compare.  By contrast, if the defendant used only the plaintiff’s images to claim that it could sell the underlying product, that would be use “for precisely the same purpose as the plaintiff.”  This transformativeness made the first factor neutral.

 

Factor two: the photos had both factual and creative elements, weighing “modestly” against fair use.  [This seems to contradict the relevance of transformativeness to other factors, but oh well.]

 

Factor three: Ashley argued that Value City could’ve easily created comparative ads without using Ashley’s photos at all.  However, the court agreed with Value City that using the photos in their entirety was fair “because the photos were created to depict Ashley’s furniture in the best possible light. Further, use of anything less than the full images would not have given consumers a complete depiction of the items of furniture for comparison.”  Thus, factor three didn’t weigh against fair use.

 

Factor four: There was no market for these photos other than Ashley itself. “Ashley sells furniture, not photographs of furniture.”  Though Ashley argued that the photos had value for its independent dealers, it provided the photos to its dealers at no cost, and any diminution in their value, or the value of Ashley’s furniture, through the photos’ use in comparative advertising was not the kind of harm copyright cares about.

 

If you’re following along, factor one is supposedly neutral, two is slightly negative, three is neutral, and four “weighs substantially in favor of a finding of fair use” because there’s just no market harm. “The significance of the fourth factor cannot be overstated. The limited monopoly copyright law grants to the creators of original works provides a concrete incentive through access to the relevant market. It follows that if no market or potential market exists for the original, then another’s use of the images does not harm the copyright holder’s interests or inhibit the incentive to produce original creative works.”