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Judge Deals A Blow To Video Pipeline

3 Apr, 2002 By: Holly J. Wagner

A New Jersey judge has dealt a severe blow to preview supplier Video Pipeline in its copyright dispute with Buena Vista Home Entertainment, finding that neither the First Sale doctrine nor the fair use defense protects Video Pipeline's homegrown trailers.

Judge Jerome B. Simandle's order barring Video Pipeline from using its trailers for 62 test titles on its Web site found, among other things, that Video Pipeline's trailers in some cases substantially distorted either the technical quality of or the studio's marketing message about the titles, potentially harming the films' video profits.

"It is likely that the previews Video Pipeline provides for its retailer customers may harm the market for the copyrighted motion picture, either due to the quality of the previews or because if its flawed representations," Simandle wrote.

The decision is critical because Simandle's legal burden was to predict which side is likely to prevail at trial.

Video Pipeline president Jed Horovitz said he is disappointed with the ruling and his attorneys are still reviewing the decision to decide whether or not to appeal.

Video Pipeline's attorneys argued the trailers actually benefit the studio with broader exposure and Buena Vista is trying to cut out the middlemen, especially on the Internet, and force companies to buy directly from its Web site.

Video Pipeline has agreements with 25 etailers including Netflix.com, Amazon.com/IMDb, and Yahoo! Shopping that pay "per megabyte actually downloaded to consumers," according to court papers.

As a result, the judge ruled, Video Pipeline is profiting from the trailers themselves, not from using them to market other products, thus is does not share the protections First Sale affords a retailer using the images to sell packaged goods. First Sale also requires that the clips be transmitted in a confined space like a video store, not disseminated across cyberspace, the judge ruled.

"Congress intended for copyright infringement to occur when images of a copy of copyrighted work are displayed to members of the public located other than where the copy is located," he wrote.

Fair use is designed to protect critical, academic and artistic work flowing from copyrighted works and so also does not protect Video Pipeline, Simandle determined.

"Video Pipeline did not create a movie from a copyrighted story; rather it used excerpts from the fictional motion pictures to create video trailers that in the end served the goal of advertising the movie for its client retailers," he wrote. "As the work here nevertheless involved creative, as opposed to factual, works, this…factor works against a finding of fair use."

Simandle did appear to leave Video Pipeline one out: to modify the way it presents trailers to include more custom content and less movie footage.

"There may be other combinations of images, short clips, criticism, description and creativity that would result in video trailers derived from copyrighted materials that would be within fair use," he wrote. "The present case does not adjudicate the works of any retailer, but rather it examines the clip previews at issue, which have been prepared and distributed for profit by a nonretailer without any significant creative expression being added."

Simandle gave Video Pipeline 10 days to banish the trailers from its Web site; stop circulating them or using the Buena Vista, Miramax, Walt Disney and Touchstone names in connection with them; and told Video Pipeline not to make any more.

The Video Software Dealers Association (VSDA) was still reviewing the decision.

"It's a long and complex opinion. We're in the process of analyzing it and understanding what it says and all the implications of it," said VSDA VP of Public Affairs Sean Bersell. VSDA is acting as a "friend of the court" in the case.

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