The Fair Use Defense in Business Copyright Disputes

Last updated: November 2026

Fair use is a statutory defense that makes some unlicensed use of a copyrighted work lawful. Courts weigh four factors: the purpose and character of the use; the nature of the work; the amount taken; and the effect on the market for the original. (17 U.S.C. § 107.) In business disputes the fair use defense succeeds mainly for commentary, criticism, comparison, and research, and rarely for copying that simply replaces a license. Kolmogorov Law, P.C. litigates fair use questions for Orange County, Los Angeles, and other California businesses.

Call (909) 235-6116 or contact us online if fair use is in play in a claim against your business or one you are considering.

What the fair use statute says: the four factors

The Copyright Act provides that the fair use of a work, for purposes such as criticism, comment, news reporting, teaching, scholarship, or research, is not an infringement. It then lists the four factors a court must consider. (17 U.S.C. § 107.) The list of purposes is illustrative. A use for one of those purposes is not automatically fair, and a use for a purpose not listed can still qualify. The statute also says that the unpublished status of a work does not by itself bar the defense. (17 U.S.C. § 107.)

Fair use is an affirmative defense. The party asserting it carries the burden, which is why I treat it as the last line of argument in most business cases, not the first.

The first factor: purpose and character

This factor asks whether the use has a further purpose or different character from the original, and to what degree. The larger the difference, the more likely the factor favors fair use. (Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith (2023) 598 U.S. 508, 528-529.) Adding something new is not enough on its own. A commercial use that serves the same purpose as the original is likely to weigh against fair use unless there is some other justification for the copying. (Warhol, 598 U.S. at pp. 531-533.)

That holding reshaped the defense for businesses. A competitor who reproduces your product photographs to sell the same product is using them for the same purpose you did. A marketing firm that lifts a paragraph from a rival's website to describe its own identical service has not changed the purpose at all. In both cases the commercial character of the use counts against the defendant.

Commentary is different. A review site that quotes your copy to criticize it, a comparison chart that reproduces a competitor's claims to rebut them, and an article that shows a screenshot to report on a product have a purpose the original did not.

The remaining three factors

The nature of the work. Creative works, such as photographs and advertising copy, receive more protection than factual compilations, such as price lists and specification sheets. Copying the facts is not infringement at all; copying the expression that presents them can be.

The amount and substantiality of the portion used. Taking the whole of a work weighs against fair use, though it is permitted where the purpose requires it, as when a critic reproduces an entire image to comment on it. Taking the most recognizable part of a work, even if small, can weigh as heavily as taking all of it.

The effect on the market. This factor asks whether the use substitutes for the original or for licenses the owner would reasonably sell. If your use fills a demand the owner could have charged for, this factor usually decides the case against you.

Business situations where fair use is raised

Three come up repeatedly.

A client receives a demand over a photograph it used in a blog post. Fair use is argued because the post was informational. That argument usually fails if the image merely decorated the post and the owner licenses the image for that purpose. It can succeed if the post discussed the image itself.

A client is accused of reproducing a competitor's marketing claims in a comparison ad. Comparative advertising that quotes the competitor accurately to rebut it is a classic fair use pattern, and the trademark side of comparative advertising is similarly protected when the comparison is truthful.

A client's internal training materials include pages scanned from a published manual. Teaching is a listed purpose, but a business that avoids buying licenses by copying is competing with the owner's market. The first and fourth factors cut against it.

A fourth is growing: copyrighted material fed into generative AI tools. We address what is settled on our AI content and copyright page.

Fair use and the DMCA

In the Ninth Circuit, a copyright owner must consider fair use before sending a takedown notice, and an owner who ignores that duty risks liability for a knowing misrepresentation. Our DMCA page explains the notice and counter-notice process. Document the fair use analysis before the notice goes out.

How we litigate the defense

For a defendant, we plead fair use in the answer and build the record on purpose: why the material was used, what it added, and what market it did or did not touch. Licensing evidence matters most. If the owner licenses the work for exactly the use made, the fourth factor is hard to win. For a plaintiff, we anticipate the defense in the demand letter and address the first and fourth factors before the other side raises them. The cases are heard in federal court; for Orange County and Los Angeles businesses, that means the Central District of California. Our intellectual property litigation page covers the related claims that travel with copyright.

What to bring to the first meeting

Bring the copied material and the original side by side. Bring the full page, ad, or document in which it was used rather than a crop. Bring any evidence of how the owner licenses the work and at what price. If you were the one copied, bring your licensing history; it is the evidence that defeats the defense. Our page on the elements of copyright infringement explains what the owner must prove before fair use is even reached.

Frequently asked questions

What is fair use in copyright law?

A defense under Section 107 that allows unlicensed use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching, scholarship, or research. Whether a particular use qualifies depends on four factors: purpose and character, nature of the work, amount used, and market effect. (17 U.S.C. § 107.) No single factor controls.

What are the four factors of fair use?

First, the purpose and character of the use, including whether it is commercial or nonprofit educational. Second, the nature of the copyrighted work. Third, the amount and substantiality of the portion used in relation to the whole. Fourth, the effect of the use on the potential market for or value of the work. (17 U.S.C. § 107.) Courts weigh them together.

Is commercial use ever fair use?

Yes. Commercial character counts against the defense but is not decisive; it is weighed against how different the use's purpose is from the original's. (Warhol, 598 U.S. at pp. 531-533.) Comparative advertising and critical reviews are commercial and often fair. Copying a competitor's content to sell the same thing almost never is.

Can I use a competitor's photos or text if I give credit?

No. Attribution is not a defense to copyright infringement, and it has no place among the four factors. Crediting the source may show good faith, which can matter for damages, but a use that would infringe without credit still infringes with it.

Does fair use apply to using someone's content in AI tools?

Unsettled. Courts have begun deciding whether training a model on copyrighted works is fair use, and the answers have depended on how the material was obtained and what the output does to the market. Using a tool to reproduce a competitor's expression in your own materials is judged the same way as any other copying.

Talk to a California copyright litigation attorney

If fair use is the question in your dispute, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is at 327 Magnet, Irvine, CA 92618, and represents businesses in Orange County, Los Angeles, and throughout California. See also our pages on responding to a copyright demand letter and intellectual property litigation.

This page provides general information about federal copyright law and is not legal advice. Outcomes depend on the purpose of the use, the market for the work, and the court.