Earlier today, the United States Supreme Court ruled 7-2 against the Andy Warhol Foundation (AWF) holding that Andy Warhol was not allowed to use Lynn Goldsmith's photograph of Prince for a series of pop-art images Warhol created that the AWF licensed to Conde Nast.
At issue before the court was factor 1 of the fair use analysis. Remember that Factor 1 looks at the "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." In particular, the court wrestled with whether Warhol's use of Goldsmith's photographs was transformative under factor 1 of the fair use analysis. Transformative use, according to a famous SCOTUS case three decades ago, Campbell v. Acuff-Rose, is defined as a use that “alter[s] the first [work] with new expression, meaning."
SCOTUS stressed that simply adding new expression or meaning doesn't automatically make something transformative. If that was the case, it would swallow up the derivative work right of many copyright owners, such as book-to-film adaptations, using samples of music, etc just by adding something new. What moves the needle in determining whether something is transformative is whether the secondary user's purpose is distinct from the original purpose. It is a matter of degree. Using the court's words, the first fair use factor “focuses on whether an allegedly infringing use has a further purpose or different character, which is a matter of degree, and the degree of difference must be weighed against other considerations, like commercialism.” In other words, the more distinct a secondary purpose is from the original, the less commercialism matters. If the original and secondary use share similar purposes, and the secondary use is for commercial purposes, the first fair use factor is likely to weigh against fair use, absent another justification for copying.
The court determined that "[t]he purpose of the image is substantially the same as that of Goldsmith’s photograph...Both are portraits of Prince used in magazines to illustrate stories about Prince.”
So what does this mean for you? When you're determining if something is fair use, especially if you want to use an image, you can't stop your analysis in factor 1 just by proclaiming you've added something new to the copyrighted material. In my opinion, you have to look at the justification of your use. Is it wholly different or distinct from the original purpose or can it supplant the original purpose? This is especially true if your use is for commercial purposes.