Warhol made screen prints from Lynn Goldsmith's photograph. Those prints have earned millions of dollars. If SCOTUS finds that Warhol infringed, who owns copyright to the Warhol prints? If they are not transformative enough to qualify as fair use, does Goldsmith own the copyright to the prints? Or does Warhol own them and he has to pay a licensing fee?
Arguably, no one owns the copyright in the general case. This is a similar case to a previous question I've answered. In short, the US has a statutory provision which bars infringing derivatives from gaining copyright.
In this particular case, it's helpful to take a look at what the Court of Appeals for the Second Circuit had to say. While evaluating transformativeness, they did not declare Warhol's works to be derivatives, but left that possibility open and stated it was closer to being a derivative than transformative fair use:
Nonetheless, although we do not conclude that the Prince Series works are necessarily derivative works as a matter of law, they are much closer to presenting the same work in a different form, that form being a high-contrast screenprint, than they are to being works that make a transformative use of the original.
That Warhol's prints might have no copyright attached to them does not mean that anyone can use them though – they are still very much based on Goldsmith's photo and the underlying copyright to the original still belongs to Goldsmith. This could well mean that Goldsmith would be able to use the Warhol prints as if she owned its copyrights.
Update: The Supreme Court has now affirmed, albeit on a narrow appeal from the Second Circuit Court of Appeal which dropped the issue that this question is about.
Only the first fair use factor of transformativeness was challenged by the Andy Warhol Foundation (AWF). Additionally, and more important for this question is that only a single use was ruled on: the licensing of one of the prints by AWF for a 2016 magazine article reprint following Prince's death. This is because Goldsmith dropped the wider infringement claims.
Here's where I realize I missed a key distinguishing fact in the case: There was indeed a narrow license for use of the photo for "artist reference" in relation to an article to be published in a 1984 Vanity Fair issue.
In effect, due to the license, the (probable) derivative could be considered non-infringing1. Nevertheless, the court ruled that the use in the 2016 issue was not fair (given there was no license for use beyond the 1984 article, AWF had to rely on a fair use defense).
In other words, the Warhol prints as a whole are not necessarily infringing derivatives2, rather, the specific use in the 2016 article was affirmed to be infringing.
In particular, I'd like to highlight the following from court:
The fair use provision, and the first factor in particular, requires an analysis of the specific “use” of a copyrighted work that is alleged to be “an infringement.” §107. The same copying may be fair when used for one purpose but not another.
- The full license text is not in any of the court decisions, so it's impossible for us to know for sure, but the portions that are quoted lead me to believe the license is vaguely worded. In particular, its in the realm of possibility that only the single derivative used on the 1984 article was licensed, but I would argue its reasonable to expect an artist to try multiple derivatives given a license for "artist reference." This could potentially have been of some consequence as the print used in the 2016 article is not the same as the one used in the 1984 article.
- But since this case was initiated in district court by the AWF seeking declaratory judgment of non-infringement, my understanding of the matter is that once the case is passed back to the district court, it will enter in that declaration given Goldsmith dropped the wider infringement claims. Take this with a grain of salt, I'm not very well-versed in trial procedure.