A primary defense against a copyright infringement lawsuit is fair use, but particularly in virtual reality cases, fair use should not be viewed as a guarantee since the outcomes in fair use cases are generally quite unpredictable, and virtual reality is such a new technology. A fair use outcome is difficult to predict because a court’s analysis will consider many aspects of the allegedly infringing work and the original work, and these aspects can weigh more or less heavily in the balancing test. Additionally, since virtual reality is so new, courts may make comparisons to many different technologies when pursuing consistency with earlier case law.
The balancing test that courts will apply to a fair use case includes four main factors. First is the purpose and character of the allegedly infringing work’s use. Is it for profit? Is it for educational purposes? If the allegedly infringing use is a video game, it is less likely to be considered fair use than a non-profit museum simulation or simulation for schools, at least with respect to this factor. However, more important for this factor is whether the allegedly infringing work’s use is transformative. Does it convey a new expression or message? If so, the work has a stronger fair use defense.
Second is the nature of the original, copyrighted work. If it is highly creative, it will receive more protection than a more factual work. So for this factor, a video game with a fictional setting will be more protected than a medical training simulation striving for an accurate replication of a specific patient’s anatomy; an allegedly infringing work based on the medical simulation would fare better with respect to this factor because the original work is less creative and more factual. Courts will also consider whether the original work was published or unpublished, and they will be more protective of an unpublished copyrighted work and less likely to find fair use.
Third is the amount and substantiality of the portion used in the allegedly infringing work in relation to the copyrighted work. Did the second work take more than necessary from the original work? Not only considering how much of the original work was used, courts will also analyze whether the heart of the copyrighted work was appropriated. If something central to the original work was used, the court is less likely to find fair use.
The most important factor is likely the fourth factor: the effect of the allegedly infringing use on the current and potential markets for the copyrighted work and derivative works. The owner of the copyrighted work must show harm to the market or value of the work. Will people purchase or use the allegedly infringing work instead of the original work, or might the allegedly infringing work instead have a positive impact on sales of the original work? Is the second work invading a market that the original work’s owner intended to enter? If more likely to harm the original work, fair use will not be found for this prong of the balancing test.