Fair Use in Commercial Content: Applying the Four Factors

Fair use is not a category of permitted uses. It is a defence a court applies to one specific use, weighing four statutory factors together, after the plaintiff has already established that copying occurred. That structure explains why the question "is this fair use?" almost never has a clean answer before someone files something.

For commercial publishers the practical goal is not certainty. It is a documented, defensible position: knowing which factors help, which hurt, and what could be changed to move the balance. This brief works through 17 U.S.C. § 107 in that spirit.

What the statute actually says

Section 107 states that fair use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching, scholarship, or research is not an infringement, and lists four factors to be considered: the purpose and character of the use, including whether it is of a commercial nature or is for nonprofit educational purposes; the nature of the copyrighted work; the amount and substantiality of the portion used in relation to the work as a whole; and the effect of the use upon the potential market for or value of the work.

Three features of that text matter more than they look. The listed purposes are examples, not a closed list. The factors are considerations, not elements — a use can lose on one and still be fair. And the statute adds that a work's unpublished status does not by itself defeat fair use, though it weighs against it.

What the statute does not contain is any quantity rule. There is no thirty-second exemption for music, no ten-percent rule for text, no four-bar rule, and no principle that attribution, non-monetisation, or a disclaimer converts an infringing use into a fair one.

The first factor after Warhol

The first factor asks about the purpose and character of the use. Since the Supreme Court's 1994 decision in Campbell v. Acuff-Rose, the central question has been whether the new work adds something new with a further purpose or different character — commonly summarised as transformativeness.

In 2023, in Andy Warhol Foundation v. Goldsmith, the Court explained how that inquiry should be run and narrowed how broadly it had been read. Describing the case in its own terms: a photographer had licensed a photograph of a musician for use as an artist's reference, the artist created a series based on it, and years later the foundation licensed one of those images to a magazine for editorial use — the same basic purpose the photographer's own licensing business served. The Court held that the first factor focuses on the particular use being challenged, that a further purpose or different character is a matter of degree rather than a switch, and that where an original and a secondary use share substantially the same purpose and the secondary use is commercial, the first factor favours the copyright owner absent some other justification for copying.

Three practical instructions follow. First, analyse the use, not the artwork: the same image can be fair in a critical essay about the artist and unfair as stock imagery on a product page. Second, added creativity or new meaning is not enough on its own if the new work is doing the same commercial job as the original. Third, the first and fourth factors are linked — a use that substitutes for the original's licensing market is weak on both.

The decision did not abolish transformativeness, overrule Campbell, or hold that commercial uses are never fair. Parody, criticism, commentary, news reporting, and genuine technological transformation remain live. The 2021 decision in Google v. Oracle, where the Court found fair use in the copying of software interface declarations to build a new platform, illustrates how far a genuinely different purpose can carry a commercial defendant.

Where commercial uses usually break

Patterns repeat across industries, and most of them fail on the same combination of factors one and four.

• Decorative use of a photograph. Illustrating a blog post with someone else's image is the paradigm of a use that substitutes for a licence. Stock photography exists precisely for this, so the market-harm factor is decisive and the purpose is identical.
• "Reaction" and compilation formats. Playing a long clip with intermittent comment is not criticism of the clip. The defensible version comments on specific moments, uses only what the comment requires, and does not reproduce the viewing experience.
• Background music. There is no critical purpose in music laid under a montage. The composition and recording each need clearance — see which music rights you actually need.
• Quoting a review or article in an advertisement. Short attributed quotation in commentary is one thing; reproducing substantial text to sell a product is another, and it can also raise endorsement issues under advertising substantiation rules.
• Satire mistaken for parody. Parody comments on the original work and needs to conjure it up. Satire uses the work to comment on something else, which weakens the justification for taking from that particular work.
• Fan and derivative merchandise. Adding new art to a protected character usually creates a derivative work rather than a transformative one, and the licensing market for merchandise is exactly the market the fourth factor protects.
• Republished user content. Screenshotting and reposting a user's photograph or video into a brand channel is copying, and platform terms rarely give the brand the licence it assumes.

Verify before relying: a licence, terms of service, or database agreement can prohibit conduct that fair use would allow. Contract restrictions are enforced on their own terms, so check the agreement before running the copyright analysis.

Running the analysis before publication

1. Identify the source work and its owner

   Fair use only matters if the material is protected and owned by someone else. Confirm the work is not in the public domain, not licensed to you already, and not your own.

2. State the purpose in one sentence

   Write what your use does that the original does not. If the honest sentence is "it makes our page look better", the analysis is finished and the answer is no.

3. Cut to the minimum

   Reduce the taking to what the stated purpose requires, and check whether the portion taken is the qualitative heart of the work.

4. Test market substitution

   Ask whether a licence for this exact use is routinely sold, and whether your audience would now have less reason to buy or licence the original. Also ask what happens if everyone does this.

5. Look for an alternative

   Licensed material, commissioned material, public domain material, or a link instead of a copy. The cheapest fair use dispute is the one you designed out.

6. Document the decision

   Record the factor-by-factor reasoning and who approved it. That file is evidence of good faith, and it is also what a takedown response is built from.

Documentation has a second function. A copyright owner sending a takedown must consider fair use before doing so, and a recipient who has a written analysis on file can answer a notice quickly and credibly. The mechanics of that exchange, including the statutory counter-notice and its jurisdictional concession, are covered in takedown and counter-notice procedures.

What losing costs

Fair use is an affirmative defence, so the defendant carries it. If it fails, the owner's remedies include an injunction, actual damages plus the infringer's profits, or statutory damages where the work was registered in time — a range that runs to $30,000 per work infringed and up to $150,000 per work where infringement is willful, along with costs and attorneys' fees at the court's discretion.

Two moderating rules matter. Statutory damages and fees are available only where registration preceded the infringement, or followed publication within the statutory grace period, which is why registration practice affects exposure on both sides. And a defendant who reasonably believed its use was fair may argue against a willfulness finding, which is a further reason the contemporaneous analysis is worth writing down.

Where the material was obtained under a licence that has since ended — including a grant that was terminated by its author — the correct answer is a new licence, not a fair use argument. That situation is covered in recapturing transferred rights.

Unsettled ground, as of 2026

Whether training a machine-learning model on copyrighted works is fair use is not settled. Multiple federal district courts issued decisions during 2025 that reached different conclusions on different records, and appellate review has not produced a uniform rule. The questions in play include whether training is a genuinely different purpose, how the fourth factor treats harm to licensing markets that are themselves emerging, and whether the lawfulness of acquiring the training copies affects the analysis.

Separately, whether a model's outputs infringe is a different question from whether training does, and it turns on ordinary substantial-similarity analysis rather than on fair use alone. Anyone building on either question should treat the position as provisional, keep records of data provenance, and address the risk contractually rather than doctrinally — the relevant terms, including a training-data clause, are discussed in contracting with AI vendors.

Questions the desk gets

If we credit the source and do not monetise, is the use fair?

Neither factor is decisive. Attribution is not part of the statutory test and does not cure copying; it can help show good faith and reduce a willfulness finding. Non-commercial character helps under the first factor but does not answer the fourth, and a use that substitutes for the original can harm the market whether or not anyone was paid for it.

The image was on the internet with no copyright notice. Does that change anything?

No. Copyright arises on fixation and notice has not been required for United States works for decades. Public availability is not permission, and an absent watermark is not a licence. The realistic effect of the absence of notice is on damages arguments, not on liability. Assume every image, clip, and article you did not create is owned by someone.

How does the Warhol decision affect a use we cleared five years ago?

Existing licences are unaffected — a licence is permission and does not depend on fair use. What the decision affects is uses that were running on a fair use theory, particularly where the material is being licensed out or used commercially in the same way the original was. Those positions are worth revisiting, especially where the earlier analysis rested mainly on new meaning or aesthetic change.

Can we rely on the Copyright Office's fair use index?

As a research tool, yes. The index summarises decided cases and is a good way to see how courts have treated comparable uses. It is not a ruling, it does not bind a court, and summaries necessarily omit the record details that drove the outcome. Use it to find the closest cases, then read them.

Is there any use that is safe without analysis?

Only material you own, material you have licensed for that use, and material in the public domain — and public domain status has to be verified per work, not assumed from age. Everything else needs a considered position. That is not a counsel of despair; it usually takes minutes, and the answer often points to a licensed alternative that costs less than the argument would.

How to use this brief

Treat fair use as a decision you make once per use, in writing, before publication. Name the purpose, cut the taking to what that purpose needs, test whether a licence for this exact use is normally sold, and record the reasoning with a named approver.

Build the same discipline into production: a rule that nobody drops third-party material into a commercial asset without either a licence or a filed analysis, a standing list of approved sources, and a fast path for the cases that need review. Where the analysis comes out close, licence it. The value of the defence is real, but it is a defence — it protects you after a claim, and it costs money to use. Related copyright, media, and platform-procedure work sits on the Intellectual Property & Media desk. This brief is general information about United States copyright law, not legal advice about a specific use.