Nonprofits and the Fair Use Defense

It is a common misconception that nonprofit organizations have special rights to use copyrighted works without permission. This misconception arises from the first fair use factor, which considers “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.”  As explained below, “nonprofit educational purposes” is very narrowly defined. Even if a use is actually included in “nonprofit educational purpose” the use may not qualify as a fair use if the other fair use factors weigh against fair use. While the law does not generally grant nonprofit organizations the right to use copyrighted works as a fair use, the U.S. Copyright Act does grant several statutory exemptions in limited situations.

The “nonprofit educational purposes” element of the first fair use factor (17 U.S.C. § 107) examines the character of the use, not the status of the organization using the work. This is not a blanket exemption that confers fair use protection to any work used by a nonprofit organization. An organization’s status as a nonprofit will rarely help it qualify for fair use. Most uses of a copyrighted work will be of a commercial nature, even uses by nonprofits where no fee is charged. During the drafting of the 1976 U.S. Copyright Act, Congress considered granting nonprofit organizations an exemption from U.S. copyright laws or creating a presumption that nonprofit use was fair use. Instead, the final version of the Copyright Act included “nonprofit educational purposes” as a component of the first fair use factor to allow for a very limited range of nonprofit uses. 

A “nonprofit educational purpose” has a narrow meaning. Case law is inconsistent about what qualifies as a “nonprofit educational purpose,” but it generally involves use for scholarship or research or use in a classroom setting on works unavailable in the commercial market. However, just because a work is used in a classroom does not mean that the use will qualify as a “nonprofit educational purpose.”  A school district recently lost a multi-million-dollar judgment for making copies of a study guide and distributing them through its classrooms. Any use of a work by a school or for any other nonprofit educational purpose should be evaluated by all four fair use factors, which could cause the fair use analysis to weigh against fair use.

Nonprofit organizations should not conclude that just because they are a “nonprofit” that any use of a copyrighted work is a fair use. In most situations, use of a copyrighted work by a nonprofit will not be a fair use. Before using a copyrighted work, nonprofit organizations should obtain the written consent of the copyright owner or obtain competent legal advice concluding that the use is a fair use or qualifies for a statutory exemption. We discuss the statutory exemptions in more detail in a separate article.

This article is provided for general information and should not be relied upon as legal advice for a specific situation. If you are in need of specific advice or legal representation, please do not hesitate to contact us.

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