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IP/Entertainment Case Law Updates

Ascend Health Corp. v. Wells

District court grants defendant’s motion to dismiss plaintiffs’ copyright infringement claim, finding that it could dismiss the claim at the motion-to-dismiss stage based on an affirmative defense of fair use.

Plaintiffs—entities and individuals affiliated with a psychiatric facility in Texas—brought suit against defendant, a former patient at the facility, alleging copyright infringement based on her unauthorized use of images from plaintiffs’ website. Plaintiffs alleged that, following the dismissal of a lawsuit against some of the plaintiffs, defendant started two blogs in which she made defamatory statements about the plaintiffs, and she posted defamatory statements on Facebook, Twitter, and YouTube. In doing so, defendant used and reproduced copyrighted images taken from two of the plaintiffs’ websites, without authorization. The images included photographs of the psychiatric facility as well as an image of the facility’s logo. Plaintiffs asserted claims for copyright infringement for the unauthorized use of these images, as well as claims for defamation and business disparagement for the disparaging remarks. Defendant moved to dismiss all these claims, asserting as a defense to the copyright claim argued that her use of the images constituted fair use. The District Court agreed, dismissing the copyright infringement claim after applying the four fair use factors listed in 17 U.S.C. § 107: (1) the purpose and character of the use, including whether the use was commercial in nature and whether the use was transformative; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion of the work used; and (4) the effect of the use on the potential market for the work.

The court first noted that although fair use is a mixed question of law and fact, it can be decided at the motion-to-dismiss stage where the “defense’s applicability is apparent from the face of the complaint” and from any documents properly submitted for the court’s consideration. In this case, plaintiffs attached to their complaint copies of the web pages on which the defendant posted the images alongside the allegedly disparaging remarks in question. The court presumed that the second and third fair use factors were neutral since neither party addressed them. As to the first factor, the court found that the defendant used the images in connection with statements criticizing the plaintiffs, including, in at least one instance, claiming that a photo of the psychiatric facility misleadingly depicted better conditions at the facility than actually existed. According to the court, defendant’s use of the images were noncommercial and transformative, because she was using the images to criticize the plaintiffs, in contrast to plaintiffs’ use of the images to promote the psychiatric facility. As to the fourth factor, which it deemed the most important, the court found that while the defendant’s remarks arguably caused harm to plaintiffs’ business, her use of the images did not hurt the market for those images because the images themselves have no commercial value or market. Having found the first and fourth fair use factors to favor fair use, and the second and third factors to be neutral, the court dismissed the claim for copyright infringement.

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