Earlier this week, Law360 reporter Ivan Moreno reported on the judge’s order in Alexander v. Take-Two Interactive Software Inc. et al.
In the recent case of Alexander v. Take-Two Interactive Software Inc., case number 3:18-cv-00966, the U.S. District Court for the Southern District of Illinois made a notable decision that may have implications for copyright law. One element of the court’s ruling addressed the expert testimony provided by Ocean Tomo Senior Managing Director James E. Malackowski who testified both as to the existing or likely market for the copyrights at issue as well as potential damages.
In copyright infringement cases, courts analyze fair use by considering four key factors:
1. Purpose and Character of the Use – This factor examines whether the use is for a commercial purpose or if it transforms the original work in a way that adds new meaning or value, such as for commentary, criticism, or parody.
2. Nature of the Copyrighted Work – Courts assess whether the copyrighted material is creative (such as artwork or literature) or factual in nature. Creative works generally receive more protection.
3. Amount and Substantiality of the Portion Used – This factor looks at the quantity of the copyrighted material used and whether it is a substantial portion of the original work, which may weigh against fair use.
4. Effect on the Market for the Copyrighted Work – Perhaps the most critical of the factors, this examines whether the use of the copyrighted work harms the market or potential market for the original material.
Malackowski’s expert testimony addressed the fourth factor—the effect on the market for the copyrighted work. His analysis demonstrated that the market for licensing tattoos for use in video games did not exist, nor was one likely to develop. As the court quoted, “Defense expert James Malackowski also provided unrebutted testimony that a market for licensing tattoos in videogames does not exist and was unlikely to be developed.” This testimony directly countered one of the plaintiff’s arguments—that their copyrighted tattoos, used on player avatars, had a potential market in the video game industry. Malackowski’s testimony regarding the market for the select intellectual property rights allowed the court to conclude that there was no foreseeable harm to any actual or potential market. The court found that no damages should be awarded to the plaintiff. This was consistent with Malackowski’s opinion presented at trial, which held that the plaintiff had not suffered any quantifiable harm.
The ruling highlights the importance of economic expertise in copyright cases and signals a potential shift towards a more market-based assessment of damages in copyright disputes.
