## Facts

- Video Pipeline, Inc. compiled and distributed movie trailers to video retailers and later provided online video previews through its websites.
- Buena Vista Home Entertainment, Inc. and Miramax Film Corp. held copyrights and controlled home-video distribution for numerous motion pictures.
- In 1988, Video Pipeline and Buena Vista entered a master clip license agreement under which Buena Vista provided authorized trailers for in-store compilation use.
- In the late 1990s, Video Pipeline shifted to online streaming of previews; Buena Vista asserted the license did not permit internet display and later terminated the agreement.
- After termination, Video Pipeline created and streamed its own “clip previews,” typically about two minutes long, by copying segments directly from Buena Vista and Miramax films without authorization.
- Video Pipeline sought declaratory relief; Buena Vista and Miramax counterclaimed for copyright infringement.
- The district court issued a preliminary injunction barring online display of the unauthorized clip previews, and Video Pipeline appealed.

## Issues

1. Whether Video Pipeline’s unauthorized creation and online streaming of two-minute “clip previews” was likely protected as fair use under 17 U.S.C. § 107.
2. Whether Buena Vista and Miramax’s licensing and enforcement practices constituted copyright misuse barring enforcement of their copyrights.
3. Whether the district court properly granted preliminary injunctive relief based on the parties’ likely success on the merits and defenses.

## Decision

- The Third Circuit affirmed the preliminary injunction.
- Video Pipeline failed to show a likelihood of success on its fair-use defense.
- The court held the clip previews likely infringed the copyright owners’ exclusive rights, including public performance and public display.
- The court rejected the copyright-misuse defense because the asserted licensing restrictions and enforcement conduct did not amount to misuse.
- The appeal was not moot because no permanent injunction had superseded the preliminary injunction.

## Legal Principles

- Fair use under 17 U.S.C. § 107 is assessed through four factors: purpose and character, nature of the work, amount used, and market effect.
- Commercial use that is not meaningfully transformative weighs against fair use, particularly where the use serves the same function as the copyrighted owner’s authorized materials.
- Use of highly creative works such as motion pictures weighs against fair use.
- Even where a small quantitative portion is copied, the selection of significant scenes for the same promotional purpose can still support infringement findings.
- Market harm is a central consideration; unauthorized uses that substitute for, or compete in, a licensing market the copyright owner exploits or reasonably may develop weigh strongly against fair use.
- Copyright misuse requires conduct that leverages copyright in a manner contrary to public policy embodied in copyright law; ordinary licensing controls and enforcement efforts, without ultra-statutory or anticompetitive extension, do not establish misuse.

## Conclusion

The Third Circuit upheld preliminary injunctive relief against online streaming of unauthorized two-minute film segments, finding Video Pipeline unlikely to succeed on fair use because the previews were commercial, non-transformative substitutes for licensed trailers and threatened the copyright holders’ trailer-licensing markets; the court also found no copyright misuse.


Video Pipeline, Inc. v. Buena Vista Home Ent. Inc., 342 F.3d 191 (3d Cir. 2003)