471 U.S. 539 (1985)
In February 1977, shortly after leaving the White House, former President Gerald R. Ford contracted with Harper & Row Publishers, Inc., and Reader's Digest Association, Inc., to publish his memoirs.1 The agreement provided Harper & Row and Reader's Digest the exclusive right to license prepublication excerpts known as first serial rights.2 Harper & Row paid Ford $25,000 upon signing and another $25,000 upon delivery of the manuscript, while the Government supplied $25,000 for researchers plus staff and access to White House files and tapes.3 The completed 460-page manuscript included roughly 200 pages on Ford's decision to pardon Richard Nixon.4
In late 1978, Victor Navasky, editor of The Nation, learned from an undisclosed source that the manuscript was in California.5 The source, described as a former Ford aide, supplied a copy to The Nation for $5,000.6 Navasky prepared a 2,250-word article titled "The Ford Memoirs — Behind the Nixon Pardon" that appeared in the April 3, 1979, issue.7 The article contained approximately 300 words of verbatim quotations from the manuscript, focused on the Nixon pardon chapters, and was published on the eve of the scheduled Time magazine serialization.8
Harper & Row had separately licensed first serial rights to Time magazine for $25,000, with $12,500 paid in advance and the balance due upon publication of a 7,500-word excerpt timed for one week before the hardcover book release.9 Time retained the right to renegotiate the second payment if any material appeared earlier.10 After The Nation article ran, Time canceled the remaining payment and the serialization.11 Harper & Row and Reader's Digest then sued Nation Enterprises in the United States District Court for the Southern District of New York, alleging copyright infringement among other claims.12
Following a six-day bench trial, the district court found that the Ford manuscript was protected by copyright at the time of The Nation's publication and that the use of the material was not fair use.13 The court awarded Harper & Row $12,500 in actual damages.14 A divided panel of the Court of Appeals for the Second Circuit reversed, holding that The Nation's use qualified as fair use.15 The Supreme Court granted certiorari.16
Whether the unauthorized use of approximately 300 words of verbatim quotations from an unpublished presidential memoir in a 2,250-word news article constitutes fair use under 17 U.S.C. § 107?17
The Copyright Act of 1976 grants to the owner of a copyright the exclusive right to reproduce the copyrighted work, to prepare derivative works, to distribute copies of the work to the public, and to display the work publicly.18 Section 107 of the Act provides that the fair use of a copyrighted work for purposes such as criticism, comment, news reporting, teaching, scholarship, or research is not an infringement of copyright.19 The factors to be considered in determining whether a particular use is fair are the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.20 The factors also include the nature of the copyrighted work.21 They include the amount and substantiality of the portion used in relation to the copyrighted work as a whole.22 They include the effect of the use upon the potential market for or value of the copyrighted work.23 These factors are to be weighed together, in light of the purposes of copyright.24
No. The purpose and character of the use by The Nation was commercial.25 It sought to exploit the Ford manuscript for the same purpose for which Harper & Row and Reader's Digest had contracted with Mr. Ford.26 The goal was to publish a scoop on the Nixon pardon.27 The article was timed to appear on the eve of the Time serialization.28
The nature of the copyrighted work weighs against fair use.29 The Ford manuscript was unpublished at the time of The Nation's use.30 Unpublished works are entitled to greater protection.31 The amount and substantiality of the portion used was substantial.32
The Nation took the heart of the book, the discussion of the Nixon pardon.33 It quoted approximately 300 words verbatim from the manuscript, including some of the most important and expressive passages.34 The effect of the use upon the potential market was substantial.35 The Nation's publication preempted the market for the first serial rights to the Ford memoirs.36
Harper & Row lost the $12,500 it had been promised by Time magazine for the right to publish excerpts from the book.37
The unauthorized use of the verbatim quotations did not constitute fair use under 17 U.S.C. § 107.38
Related opinions on this issue
Joined by Justice Marshall
Justice Brennan dissented on the ground that the purpose of The Nation's use was news reporting and comment on an important historical event, the pardon of former President Nixon.39 He noted that the nature of the copyrighted work was a historical and political memoir.40 The amount and substantiality of the portion used was small in relation to the 200,000-word manuscript.41
The effect on the potential market was speculative.42 Brennan argued that the Court's decision expands the scope of copyright protection at the expense of the First Amendment interest in the free dissemination of ideas.43 He would affirm the judgment of the Court of Appeals.44