Frankly, I Find Your Work Derivative: derivative works law as related to virtual reality environments and simulations

Summary (TLDR)

Creating a virtual reality simulation based on a preexisting TV show, movie, videogame or other work, may expose the creator to copyright  infringement liability based on the concept of “derivative works.”  The vagaries of the Fair Use doctrine are such that relying on Fair Use is not recommended.

Introduction

Some of the most interesting VR projects that I’ve seen involve the creation of virtual environments based on TV shows, movies, videogames and the like.  Various questions regarding possible copyright issues surrounding the creation of such projects have been posted on Reddit.  While a lot of the comments addressing these questions have been pretty spot on, I thought I’d take some time to present the legal framework for addressing this type of issue.   As always, this is not intended to be legal advice and you should not rely on this blog post (or any blog post for that matter) as part of any decision making process that might subject you to copyright liability.

Derivative Works, Copyright Infringement, & Virtual Reality

The area of copyright law that is most relevant to these issues is the area that deals with “derivative works.”  A “derivative work” is a work based on one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation or any other form in which a work may be recast, transformed, or adapted.  A work is considered derivative if it contains a substantial amount of material from the preexisting work.  Owners of copyrights have the exclusive right to prepare derivative works.  Therefore, people who create unauthorized derivative works, may be liable for copyright infringement.    According to the U.S. Copyright Office: “The safest course is to get permission from the copyright owner before using copyrighted material.”

When dealing with a virtual reality derivative work issue, there are really 2 questions: 1) is the virtual reality project an infringing derivative work?, and 2) assuming the virtual reality project is a derivative work, does the project qualify for the “fair use” exception?   In some cases a derivative work may be entitled to its own copyright protection, but a detailed description of those circumstances is beyond the scope of this discussion.

Virtual Reality Hogwarts: A Hypothetical

Let’s explore the issue by way of a hypothetical example.  Pretend Debbie is a huge fan of the Harry Potter franchise.  Since she first read (and saw the accompanying movie) the “Sorcerer’s Stone” she has dreamed of wandering around Hogwarts.  Because Debbie is a Unity ninja she created an exact virtual reality replica of the Hogwarts campus as depicted in the Harry Potter movies and posted a free downloadable Unity build to share with the world.  For the purposes of this example, let’s assume that anyone familiar with the Harry Potter movies would immediately recognize Debbie’s VR environment as Hogwarts and Debbie has named her project “Virtual Reality Hogwarts.”

Is Debbie’s VR Environment a Derivative Work that Infringes on the Harry Potter Copyrights?

Based on facts above, Debbie’s VR Hogwarts is probably an infringing derivative work.  The VR Hogwarts would likely be classified as a derivative work by way of the catch all phrase “any other form in which a work may be recast, transformed, or adapted.”  Here, Debbie has recast, transformed and adapted the visual depiction of Hogwarts presented in the Harry Potter movies into a virtual reality environment.  Warner Brothers and J.K. Rowling own the copyrights to the visual depiction of Hogwarts, and Debbie did not get their permission to use it.  Since the VR environment is “substantially similar” to the copyrighted work, Debbie is probably liable for copyright infringement.

Will Debbie be Able to Rely on the Fair Use Exception?

Generally speaking, if you rely on the fair use exception, you’re gonna have a bad time.  The distinction between what is fair use and what is infringement in a particular case will not always be clear or well defined.  In analyzing whether the fair use defense applies, courts will look to the various purposes for which use of a copyrighted work is considered “fair” including: criticism, comment, news reporting, teaching, scholarship, and research.  Section 107 of the copyright statute also sets out four factors to be considered in determining whether a use is “fair.”  They are 1) the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes; 2) the nature of the copyrighted work; 3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and 4) the effect of the use upon the potential market for, or value of, the copyrighted work.  If you’re thinking that these four factors are a little vague, you’d be right.  Both courts and scholars have had a difficult time determining exactly what they mean.

Because of his frustration with these vagaries, Judge Pierre Laval published a Harvard Law Review article entitled “Toward a Fair Use Standard” in which he attempted to clarify some of the confusion.  Relying heavily on Leval’s article, Justice Souter wrote in Campbell v. Acuff-Rose Music:

Under the first of the four §107 factors, “the purpose and character of the use, including whether such use is of a commercial nature…,” the enquiry focuses on whether the new work merely supersedes the objects of the original creation, or whether and to what extent it is “transformative,” altering the original with new expression, meaning, or message. The more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use. [emphasis added]

While still unpredictable, the standard for transformativeness seem to be defined by two questions 1) whether the material taken from the original work has been transformed by adding new expression or meaning; and 2) whether value was added to the original by creating new information, aesthetics, insights or understandings.

In applying these standards to the virtual reality Hogwarts example, we can argue that the project is a non commercial, research application and that the immersive nature of the VR simulation is highly tranformative, as it recasts a curated 2d depiction into an interactive environment free from the editorial constraints of a polished, big budget movie.  Of course, Warner Brothers will present arguments on the other side.  Ultimately, whether the VR Hogwarts project is considered fair use will depend on the skill of the attorneys arguing the case, whether the Judge slept well that night, the weather, and other “soft” variables that are difficult to quantify.

Another real world consideration to keep in mind is that in order to get to the point where a judge is deciding the case, Debbie would have had to spend tens, and possibly hundreds of thousands of dollars on attorneys and ancillary expenses.  In other words, even if Debbie wins, she loses.

Damages for Copyright Infringement:

Generally speaking a person who infringes on a copyright will be liable for damages in the amount of either the copyright holder’s actual damages including any profits from the infringing work, or statutory damages which can be up to $30,000 (or $150,000 if the infringement is found to be “willfull”).  Whether the copyright holder would go through the trouble and expense to litigate or just demand the project be taken down is up to the copyright holder.

Conclusion:

In closing I will return to the words of the U.S. Copyright Office: “The safest course is to get permission from the copyright owner before using copyrighted material.”

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