PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
A.V., a minor, by his next friend
Robert Vanderhye; K.W., a minor,
by his next friend Kevin Wade,
Sr.; E.N., a minor, by her next
friend Scott Nelson; M.N., a
minor, by her next friend Scott
Nelson, No. 08-1424
Plaintiffs-Appellants,
v.
IPARADIGMS, LLC,
Defendant-Appellee.
A.V., a minor, by his next friend
Robert Vanderhye; K.W., a minor,
by his next friend Kevin Wade,
Sr.; E.N., a minor, by her next
friend Scott Nelson; M.N., a
minor, by her next friend Scott
Nelson, No. 08-1480
Plaintiffs-Appellees,
v.
IPARADIGMS, LLC,
Defendant-Appellant.
Appeals from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, Senior District Judge.
(1:07-cv-00293-CMH-BRP)
2 A.V. v. IPARADIGMS, LLC
Argued: December 4, 2008
Decided: April 16, 2009
Before WILKINSON, MOTZ, and TRAXLER,
Circuit Judges.
Affirmed in part, reversed in part, and remanded by published
opinion. Judge Traxler wrote the opinion, in which Judge
Wilkinson and Judge Motz joined.
COUNSEL
ARGUED: Robert Arthur Vanderhye, McLean, Virginia, for
Appellants/Cross-Appellees. James F. Rittinger, SATTER-
LEE, STEPHENS, BURKE & BURKE, New York, New
York, for Appellee/Cross-Appellant. ON BRIEF: Joshua M.
Rubins, Justin E. Klein, SATTERLEE, STEPHENS, BURKE
& BURKE, New York, New York, for Appellee/Cross-
Appellant.
OPINION
TRAXLER, Circuit Judge:
Plaintiffs brought this copyright infringement action against
defendant iParadigms, LLC, based on its use of essays and
other papers written by plaintiffs for submission to their high
school teachers through an online plagiarism detection service
operated by iParadigms. See 17 U.S.C. § 501. iParadigms
asserted counterclaims alleging that one of the plaintiffs
gained unauthorized access to iParadigms’ online service in
violation of the Computer Fraud and Abuse Act, see 18
A.V. v. IPARADIGMS, LLC 3
U.S.C. §§ 1030(a)(5)(A)(iii) & (B)(i), and the Virginia Com-
puter Crimes Act, see Va. Code Ann. § 18.2-152.1-18.2-
152.16. The district court granted summary judgment in favor
of iParadigms on plaintiffs’ copyright infringement claim
based on the doctrine of fair use. See 17 U.S.C. § 107. On the
counterclaims, the district court granted summary judgment
against iParadigms based on its conclusion that iParadigms
failed to produce evidence that it suffered any actual or eco-
nomic damages.
The parties cross appeal. We affirm the grant of summary
judgment on the plaintiffs’ copyright infringement claim, but
reverse the summary judgment order as to iParadigms’ coun-
terclaims and remand for further consideration.
I.
Defendant iParadigms owns and operates "Turnitin Plagia-
rism Detection Service," an online technology system
designed to "evaluate[ ] the originality of written works in
order to prevent plagiarism." S.J.A. 1. According to
iParadigms, Turnitin offers high school and college educators
an automated means of verifying that written works submitted
by students are originals and not the products of plagiarism.
When a school subscribes to iParadigms’ service, it typically
requires its students to submit their written assignments "via
a web-based system available at www.turnitin.com or via an
integration between Turnitin and a school’s course manage-
ment system." S.J.A. 1-2. In order to submit papers online,
students "must be enrolled in an active class" and must "enter
the class ID number and class enrollment password" supplied
by the assigning professor. J.A. 240.
After a student submits a writing assignment, Turnitin per-
forms a digital comparison of the student’s work with content
available on the Internet, including "student papers previously
submitted to Turnitin, and commercial databases of journal
4 A.V. v. IPARADIGMS, LLC
articles and periodicals." S.J.A. 2.1 For each work submitted,
Turnitin creates an "Originality Report" suggesting a percent-
age of the work, if any, that appears not to be original. The
assigning professor may, based on the results of the Original-
ity Report, further explore any potential issues.
The Turnitin system gives participating schools the option
of "archiving" the student works. When this option is
selected, Turnitin digitally stores the written works submitted
by students "so that the work becomes part of the database
used by Turnitin to evaluate the originality of other student’s
works in the future." S.J.A. 2.2 The archived student works are
stored as digital code, and employees of iParadigms do not
read or review the archived works.
To submit a paper to Turnitin, a student must create a user
profile on the web site, a process that requires the student to
click on "I Agree" under the "terms of agreement" or "Click-
wrap Agreement." The Clickwrap Agreement provided,
among other things, that the services offered by Turnitin are
"conditioned on [the user’s] acceptance without modification
of the terms, conditions, and notices contained herein," and
that "[i]n no event shall iParadigms . . . be liable for any . . .
damages arising out of or in any way connected with the use
of this web site." J.A. 340.
When they initiated the lawsuit, the four plaintiffs were
minor high school students and thus appeared in this litigation
via their next friends. Plaintiffs A.V. and K.W. attended
1
The comparison occurs as follows: "[T]he Turnitin system makes a
‘fingerprint’ of the work by applying mathematical algorithms to its con-
tent. This fingerprint is merely a digital code. Using the digital fingerprint
made of the student’s work, the Turnitin system compares the student’s
work electronically to content available on the Internet . . . and student
papers previously submitted to Turnitin." S.J.A. 2.
2
At the time plaintiffs filed this action, there were approximately 7,000
institutional Turnitin subscribers that, in turn, resulted in the submission
of about 125,000 papers each day.
A.V. v. IPARADIGMS, LLC 5
McLean High School in Fairfax County, Virginia, which
began using Turnitin in 2006 and opted to have its student
papers archived in the Turnitin data base. Plaintiffs E.N. and
M.N. attended Desert Vista High School in Tucson, Arizona,
which also subscribed to the Turnitin service and elected the
archiving option. According to the complaint, both schools
required students to submit their written assignments via
Turnitin.com to receive credit; failure to do so would result in
a grade of "zero" for the assignment under the policy of both
schools.
Plaintiffs K.W., E.N. and M.N. allege that their teachers
adhered to school policy and required them to submit their
written assignments to Turnitin. Using the passwords pro-
vided by the schools, K.W., E.N. and M.N. submitted their
papers, each of which included a "disclaimer" objecting to the
archiving of their works.3 As requested by the two high
schools, however, each of these submissions was archived.
A.V., the fourth plaintiff, did not submit his paper for credit
in a high school course; instead, he submitted his work to
Turnitin using a password designated for students enrolled in
a college course at the University of California, San Diego
("UCSD"). The password was provided to A.V. by plaintiffs’
counsel who obtained it by conducting an internet search.
According to iParadigms, "no one at iParadigms read[ ] or
review[ed] the [p]apers submitted" by plaintiffs, and
iParadigms did not send any "[p]aper at issue in this action
. . . to anybody other than the instructor to whom plaintiffs[ ]
submitted their own papers." S.J.A. 2.
Plaintiffs filed a complaint alleging that iParadigms
infringed their copyright interests in their works by archiving
them in the Turnitin database without their permission.4 The
3
Shortly before plaintiffs submitted their assignments to Turnitin, plain-
tiffs’ counsel applied for and was granted a copyright registration for each
paper at issue.
4
Plaintiffs also alleged that the Turnitin system offends copyright law
because it "may send a full and complete copy of a student’s unpublished
6 A.V. v. IPARADIGMS, LLC
district court granted summary judgment to iParadigms on
two bases. First, the court found that the students and
iParadigms entered into binding agreements when the stu-
dents clicked on "I Agree," and that the agreements shielded
iParadigms from liability arising out of plaintiffs’ use of the
Turnitin website. Furthermore, the court concluded that the
disclaimers included on plaintiffs’ written submissions did not
"modify the Agreement or render it unenforceable." J.A. 50.5
Second, the court determined that iParadigms’ use of each
of the plaintiffs’ written submissions qualified as a "fair use"
under 17 U.S.C. § 107 and, therefore, did not constitute
infringement. In particular, the court found that the use was
transformative because its purpose was to prevent plagiarism
by comparative use, and that iParadigms’ use of the student
works did not impair the market value for high school term
papers and other such student works.
manuscript to an iParadigms client anywhere in the world upon request of
the client, and without the student’s permission." J.A. 22. Plaintiffs, how-
ever, have not produced any evidence to demonstrate that this occurred
with respect to the plaintiffs’ works at issue here. Accordingly, we confine
our review of the copyright issues to iParadigms’ practice of archiving
documents.
5
Plaintiffs offered two other theories upon which the district court could
find the Clickwrap Agreement unenforceable, which the court also
rejected. First, the district court disagreed that the agreement was an unen-
forceable adhesion contract, finding no evidence that plaintiffs were
coerced by iParadigms (as opposed to the schools). Second, the district
court refused to void the contract based on the doctrine of infancy, see Zel-
nick v. Adams, 561 S.E.2d 711, 715 (Va. 2002) ("[A] contract with an
infant is not void, only voidable by the infant upon attaining the age of
majority."), concluding that plaintiffs cannot use this doctrine as a "sword"
to void a contract while retaining the benefits of the contract — high
school credit and standing to bring this action, cf. 5 Richard A. Lord, Wil-
liston on Contracts § 9.14 (4th ed.) ("When the infant has received consid-
eration which he still possesses, . . . he cannot, upon reaching majority,
keep it and refuse to pay.")
A.V. v. IPARADIGMS, LLC 7
iParadigms asserted four counterclaims, but only two are
now at issue: (1) that plaintiff A.V. gained unauthorized
access to Turnitin by using passwords designated for use by
college students enrolled at UCSD, in violation of the Com-
puter Fraud and Abuse Act ("CFAA"), see 18 U.S.C. § 1030;
and (2) that plaintiff A.V., based on the aforementioned unau-
thorized access, violated the Virginia Computer Crimes Act
("VCCA"), see Va. Code Ann. § 18.2-152.3.
The district court rejected both counterclaims, granting
summary judgment to plaintiff A.V. on the grounds that there
was no evidence of actual or economic damages suffered by
iParadigms as a result of the alleged violations under the
CFAA and the VCCA.
II. Plaintiffs’ Appeal
We first consider the summary judgment order as to plain-
tiffs’ copyright infringement claim. The owner of a copyright
enjoys "a bundle of exclusive rights" under section 106 of the
Copyright Act, Harper & Row, Publishers, Inc. v. Nation
Enters., 471 U.S. 539, 546 (1985), including the right to copy,
the right to publish and the right to distribute an author’s
work, see id. at 547; see also 17 U.S.C. § 106 (also including
among fundamental rights in copyrighted works rights to dis-
play, to perform, and to prepare derivative works). These
rights "vest in the author of an original work from the time of
its creation." Harper & Row, 471 U.S. at 547. "‘Anyone who
violates any of the exclusive rights of the copyright owner,’
that is, anyone who trespasses into his exclusive domain by
using or authorizing the use of the copyrighted work . . . ‘is
an infringer of the copyright.’" Sony Corp. of America v. Uni-
versal City Studios, Inc., 464 U.S. 417, 433 (1984) (quoting
17 U.S.C. § 501(a)).
The ownership rights created by the Copyright Act, how-
ever, are not absolute; these rights, while exclusive, are "lim-
ited in that a copyright does not secure an exclusive right to
8 A.V. v. IPARADIGMS, LLC
the use of facts, ideas, or other knowledge." Bond v. Blum,
317 F.3d 385, 394 (4th Cir. 2003). Rather, copyright protec-
tion extends only to the author’s manner of expression. See 17
U.S.C. § 102(b) ("In no case does copyright protection for an
original work . . . extend to any idea, procedure, process, sys-
tem, method of operation, concept, principle, or discovery,
regardless of the form in which it is described . . ."); Feist
Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 344-45
(1991) ("The most fundamental axiom of copyright law is that
no author may copyright his ideas or the facts he narrates."
(internal quotation marks and alteration omitted)).
Moreover, the copyright owner’s rights are subject to sev-
eral exceptions enumerated by the Copyright Act. "[T]he defi-
nition of exclusive rights in § 106 of the [Copyright] Act is
prefaced by the words ‘subject to sections 107 through [122].’
Those sections describe a variety of uses of copyrighted mate-
rial that ‘are not infringements of copyright’ ‘notwithstanding
the provisions of § 106.’" Sony, 464 U.S. at 447 (quoting 17
U.S.C. § 106).
One of these statutory exceptions codifies the common-law
"fair use" doctrine, which "allows the public to use not only
facts and ideas contained in a copyrighted work, but also
expression itself in certain circumstances." Eldred v. Ashcroft,
537 U.S. 186, 219 (2003); see Campbell v. Acuff-Rose Music,
Inc., 510 U.S. 569, 577 (1994) ("Congress meant § 107 to
restate the present judicial doctrine of fair use . . . and
intended that courts continue the common-law tradition of fair
use adjudication." (internal quotation marks omitted)). "From
the infancy of copyright protection, some opportunity for fair
use of copyrighted materials has been thought necessary to
fulfill copyright’s very purpose, ‘[t]o promote the Progress of
Science and useful Arts . . . .’" Campbell, 510 U.S. at 575
(quoting U.S. Const., Art. I, § 8, cl. 8). Courts have tradition-
ally regarded "fair use" of a copyrighted work as "a privilege
in others than the owner of the copyright to use the copy-
righted material in a reasonable manner without his consent."
A.V. v. IPARADIGMS, LLC 9
Harper & Row, 471 U.S. at 549 (internal quotation marks
omitted).
Thus, the copyright owner’s "monopoly . . . is limited and
subject to a list of statutory exceptions, including the excep-
tion for fair use provided in 17 U.S.C. § 107." Bond, 317 F.3d
at 393 (internal quotation marks and citation omitted). A per-
son who makes fair use of a copyrighted work is not an
infringer even if such use is otherwise inconsistent with the
exclusive rights of the copyright owner. See 17 U.S.C. § 107
(providing that "the fair use of a copyrighted work . . . is not
an infringement of copyright"); cf. Bond, 317 F.3d at 394 ("A
fair-use analysis bears relevance only when a challenged use
violates a right protected by the Copyright Act.").
Section 107 provides that "the fair use of a copyrighted
work . . . for purposes such as criticism, comment, news
reporting, teaching (including multiple copies for classroom
use), scholarship, or research, is not an infringement of copy-
right." 17 U.S.C. § 107. Congress provided four nonexclusive
factors for courts to consider in making a "fair use" determi-
nation:
(1) the purpose and character of the use, including
whether such use is of a 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.
17 U.S.C. § 107. Section 107 contemplates that the question
of whether a given use of copyrighted material is "fair"
requires a case-by-case analysis in which the statutory factors
10 A.V. v. IPARADIGMS, LLC
are not "treated in isolation" but are "weighed together, in
light of the purposes of copyright." Campbell, 510 U.S. at
578.
With these general principles in mind, we consider each of
the statutory factors.
First Factor
The first fair use factor requires us to consider "the purpose
and character of the use, including whether such use is of a
commercial nature or is for nonprofit educational purposes."
17 U.S.C. § 107(1). A use of the copyrighted material that has
a commercial purpose "tends to weigh against a finding of fair
use." Harper & Row, 471 U.S. at 562. "The crux of the prof-
it/nonprofit distinction is not whether the sole motive of the
use is monetary gain but whether the user stands to profit
from exploitation of the copyrighted material without paying
the customary price." Id.
In assessing the "character" of the use, we should consider
the specific examples set forth in section 107’s preamble,
"looking to whether the use is for criticism, or comment, or
news reporting, and the like," with the goal of determining
whether the use at issue "merely supersedes the objects of the
original creation, or instead adds something new, with a fur-
ther purpose or different character." Campbell, 510 U.S. at
578-79 (internal quotation marks, alteration and citation omit-
ted). Courts, therefore, must examine "whether and to what
extent the new work is transformative . . . . [T]he more trans-
formative the new work, the less will be the significance of
other factors, like commercialism, that may weigh against a
finding of fair use." Id. at 579 (internal quotation marks omit-
ted). A "transformative" use is one that "employ[s] the quoted
matter in a different manner or for a different purpose from
the original," thus transforming it. Pierre N. Leval, Commen-
tary, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105,
1111 (1990).
A.V. v. IPARADIGMS, LLC 11
In considering the character and purpose of iParadigms’ use
of the student works, the district court focused on the question
of whether the use was transformative in nature. The court
concluded that "iParadigms, through Turnitin, uses the papers
for an entirely different purpose, namely, to prevent plagia-
rism and protect the students’ written works from plagiarism
. . . by archiving the students’ works as digital code." J.A. 54.
Although the district court recognized that iParadigms intends
to profit from its use of the student works, the court found that
iParadigms’ use of plaintiffs’ works was "highly transforma-
tive," J.A. 54, and "provides a substantial public benefit
through the network of educational institutions using Turni-
tin." J.A. 55. Accordingly, the court concluded that the first
factor weighed in favor of a finding of fair use.
Plaintiffs argue the district court’s analysis contained sev-
eral flaws. First, they suggest that the district court ignored
the commercial nature of iParadigms’ use of their materials,
highlighting the fact that iParadigms is a for-profit company
that enjoys millions of revenue dollars based on its ever-
increasing database of student works. Seizing upon the
Supreme Court’s suggestion in Sony that "every commercial
use of copyrighted material is presumptively an unfair exploi-
tation of the monopoly privilege that belong to the owner of
the copyright," 464 U.S. at 451, plaintiffs contend that the
archiving of their papers cannot constitute a fair use under
section 107.
The district court, however, did not ignore the fact that
iParadigms’ use of the plaintiffs’ works occurred in the com-
mercial context; indeed, the court expressly noted that
"iParadigms makes a profit in providing this service to educa-
tional institutions." J.A. 55. But the fact that the disputed use
of copyrighted material is commercial is not determinative in
and of itself. See Sony, 464 U.S. at 448. As the Second Circuit
observed, "[s]ince many, if not most, secondary users seek at
least some measure of commercial gain from their use, unduly
emphasizing the commercial motivation of a copier will lead
12 A.V. v. IPARADIGMS, LLC
to an overly restrictive view of fair use." American Geophysi-
cal Union v. Texaco, Inc., 60 F.3d 913, 921 (2d Cir. 1994);
see Campbell, 510 U.S. at 584 (observing that "[i]f . . . com-
merciality carried presumptive force against a finding of fair-
ness, the presumption would swallow nearly all of the
illustrative uses listed in the preamble paragraph of § 107,"
which "are generally conducted for profit in this country"
(internal quotation marks omitted)). The Court has made clear
that Sony did not establish a per se rule that a commercial use
barred a fair use finding. See Campbell, 510 U.S. at 585 ("The
Court of Appeals’ elevation of one sentence from Sony to a
per se rule . . . runs as much counter to Sony itself as to the
long common-law tradition of fair use adjudication."). Thus,
although a commercial use finding generally weighs against
a finding of fair use, it must "be weighed along with [the]
other factors in fair use decisions." Sony, 464 U.S. at 449
n.32.
In this case, the district court determined that the commer-
cial aspect was not significant in light of the transformative
nature of iParadigms’ use. See Campbell, 510 U.S. at 578-79.
The district court simply weighed the commercial nature of
iParadigms’ use along with other fair use factors, as is appro-
priate under Supreme Court precedent. See id. at 579
(explaining that "the more transformative the new work, the
less will be the significance of other factors, like commercial-
ism, that may weigh against a finding of fair use").
Plaintiffs also argue that iParadigms’ use of their works
cannot be transformative because the archiving process does
not add anything to the work — Turnitin merely stores the
work unaltered and in its entirety. This argument is clearly
misguided. The use of a copyrighted work need not alter or
augment the work to be transformative in nature. Rather, it
can be transformative in function or purpose without altering
or actually adding to the original work. See, e.g., Perfect 10,
Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007)
(concluding that Google’s use of copyrighted images in
A.V. v. IPARADIGMS, LLC 13
thumbnail search index was "highly transformative" even
though the images themselves were not altered, in that the use
served a different function than the images served).
iParadigms’ use of plaintiffs’ works had an entirely different
function and purpose than the original works; the fact that
there was no substantive alteration to the works does not pre-
clude the use from being transformative in nature.
Plaintiffs further contend that, even if iParadigms’ use of
their works has a transformative purpose, the use itself is not
transformative if it fails to effect such purpose. Plaintiffs
assert that there is at least a question of fact as to whether
Turnitin effectively prevents plagiarism such that summary
judgment is inappropriate. In support of this contention, plain-
tiffs offered evidence showing that it is possible to defeat the
Turnitin system by paraphrasing the original copyrighted
work and that the system sometimes does not catch even ver-
batim copying. In other words, because the Turnitin system is
not fool-proof, the archiving of plaintiffs’ works to compare
and detect plagiarism cannot be transformative.
We reject this assertion as well. The question of whether a
use is transformative does not rise or fall on whether the use
perfectly achieves its intended purpose. Cf. Campbell, 510
U.S. at 582 (declining to evaluate the quality of the parody
and declaring that "when fair use is raised in defense of par-
ody, [the threshold question] is whether a parodic character
may reasonably be perceived"). Plaintiffs do not dispute that
the Turnitin system does detect some level of plagiarism, even
if, as they assert in the complaint, "[t]he Turnitin system is
capable of detecting only the most ignorant or lazy attempts
at plagiarism by students without significant monetary
resources." J.A. 21. Whether a better plagiarism detection sys-
tem could be designed is not important to our analysis of
whether the disputed use serves a different purpose or func-
tion.
The district court, in our view, correctly determined that the
archiving of plaintiffs’ papers was transformative and favored
14 A.V. v. IPARADIGMS, LLC
a finding of "fair use." iParadigms’ use of these works was
completely unrelated to expressive content and was instead
aimed at detecting and discouraging plagiarism.
Second Factor
In considering the nature of the copyrighted work, the
Supreme Court has instructed that "fair use is more likely to
be found in factual works than in fictional works," whereas "a
use is less likely to be deemed fair when the copyrighted work
is a creative product." Stewart v. Abend, 495 U.S. 207, 237
(1990) (internal quotation marks and alteration omitted). This
postulate recognizes the notion that a work is entitled to
greater copyright protection as it comes closer to "the core of
creative expression." Bond, 317 F.3d at 395. However, if the
disputed use of the copyrighted work "is not related to its
mode of expression but rather to its historical facts," then the
creative nature of the work is mitigated. Id. at 396. And, in
fact, the district court concluded that iParadigms’ use of the
plaintiffs’ works "relate[d] solely to the comparative value of
the works" and did not "diminish[ ] the incentive for creativity
on the part of students." J.A. 55. The district court noted that,
if anything, iParadigms’ use of the students’ works fostered
the development of original and creative works "by detecting
any efforts at plagiarism by other students." J.A. 55.
Plaintiffs contend that the district court’s application of this
factor was flawed in two respects. First, they argue that the
court failed to account for the fact that their works were
unpublished. Because an author enjoys the "right to control
the first public appearance of his undisseminated expression,"
the fair use of an unpublished work is narrower in scope. Har-
per & Row, 471 U.S. at 555; see id. at 564 ("[T]he author’s
right to control the first public appearance of his expression
weighs against such use of the work before its release."). In
its order, the district court omits mention of this fact; there-
fore, plaintiffs suggest that the district court’s entire analysis
of the second statutory factor is invalid.
A.V. v. IPARADIGMS, LLC 15
We disagree that the lack of an express reference to the
unpublished status of plaintiffs’ works undermines the court’s
analysis under § 107(2). Not only has the Supreme Court
admonished courts to resist weighing the fair use factors in
isolation, see Campbell, 510 U.S. at 578, but Congress specif-
ically provided that "[t]he fact that a work is unpublished
shall not itself bar a finding of fair use if such finding is made
upon consideration of all the above factors." 17 U.S.C. § 107.
Therefore, in Bond, we were able to conclude that the intro-
duction into a court proceeding of an original work of fiction
constituted fair use under § 107 despite the fact that the copy-
righted work was unpublished:
That Bond’s manuscript is unpublished and contains
a stylized mode of expressing his feelings about his-
torical facts weigh against a finding of fair use. But,
as Campbell instructs, we do not consider the § 107
factors in isolation from one another, but we weigh
them together in light of the purposes of copyright.
Where, as here, the use of the work is not related to
its mode of expression but rather to its historical
facts and there is no evidence that the use of Bond’s
manuscript in the state legal proceedings would
adversely affect the potential market for the manu-
script, one cannot say the incentive for creativity has
been diminished in any sense.
Id. at 395-96 (emphasis added) (internal quotation marks and
citations omitted). Here, the district court, quoting Bond, con-
cluded that iParadigms’ use was unconnected to any creative
element in plaintiffs’ works. Given that the district court drew
its language verbatim from a passage in Bond discussing the
fair use of unpublished works of fiction, the district court
clearly did not ignore the unpublished nature of these works.
Moreover, it is clear that iParadigms’ use of plaintiffs’
works did not have the "intended purpose" or "incidental
effect" of supplanting plaintiffs’ rights to first publication.
16 A.V. v. IPARADIGMS, LLC
Harper & Row, 471 U.S. at 562. This is significant in that the
primary basis for the close scrutiny courts give the use of an
unpublished work is, as previously noted, an "author’s right
to control the first public appearance of his expression." Id. at
564. iParadigms did not publicly disseminate or display plain-
tiffs’ works and did not send them to any third party "other
than the instructor to whom plaintiffs submitted their own
papers." S.A. 2. In fact, the Turnitin digital archiving process
does not involve any review of the submitted works at all,
even by those at iParadigms. Thus, no employee of
iParadigms read or reviewed the works submitted by plain-
tiffs. We find no basis whatsoever for concluding that
iParadigms’ use of the plaintiffs’ papers undermined their
right to first publication.
Plaintiffs contend that the district court’s consideration of
the "nature of the copyrighted works" factor was flawed for
a second reason: the district court ignored the fact that the
works in question were works of fiction and poetry, which are
considered "highly creative" in nature and deserving of the
strongest protection. This argument is unpersuasive as well in
that the district court expressly acknowledged its obligation to
consider whether the works in question came within the "core
of creative expression." J.A. 55. Rather than ignore it, how-
ever, the district court simply concluded that even if the plain-
tiffs’ works were highly creative in nature, iParadigms’ use of
the plaintiffs’ works was not related to the creative core of the
works. In concluding that the second factor favored neither
plaintiffs nor iParadigms, the district court was merely apply-
ing Bond in which we concluded that the use of an unpub-
lished work of fiction in a court proceeding constituted fair
use because such use was "not related to its mode of expres-
sion but rather to its historical facts." 317 F.3d at 396.
iParadigms’ use of the works in the case—as part of a digit-
ized database from which to compare the similarity of type-
written characters used in other student works—is likewise
unrelated to any creative component. Thus, we find no fault
in the district court’s application of the second fair use factor.
A.V. v. IPARADIGMS, LLC 17
Third Factor
The third fair use factor requires us to consider "the amount
and substantiality of the portion used in relation to the copy-
righted work as a whole." 17 U.S.C. § 107(3). Generally
speaking, "as the amount of the copyrighted material that is
used increases, the likelihood that the use will constitute a
‘fair use’ decreases." Bond, 317 F.3d at 396. But this statutory
factor also requires courts to consider, in addition to quantity,
the "quality and importance" of the copyrighted materials
used, Campbell, 510 U.S. at 587, that is, whether the portion
of the copyrighted material was "the heart of the copyrighted
work." Sundeman v. The Seajay Soc’y, Inc., 142 F.3d 194,
205 (4th Cir. 1998) (internal quotation marks omitted).
Although "[c]opying an entire work weighs against finding a
fair use, . . . it does not preclude a finding of fair use"; there-
fore, "[t]he extent of permissible copying varies with the pur-
pose and character of the use." Id. at 205-06 (internal
quotation marks omitted) (emphasis added).
The district court found that this factor, like the second fac-
tor, did not favor either party. The court concluded that
although iParadigms uses substantially the whole of plaintiffs’
works, iParadigms’ "use of the original works is limited in
purpose and scope" as a digitized record for electronic "com-
parison purposes only." J.A. 56. Having already concluded
that such use of plaintiffs’ works was transformative, the dis-
trict court concluded that iParadigms’ use of the entirety of
plaintiffs’ works did not preclude a finding of fair use.
The plaintiffs contend that the district court erred by refer-
ring to the transformative nature of iParadigms’ use in its
analysis of the amount and substantiality of the portion of the
copyrighted work used under § 107(3). In our view, the dis-
trict court did not analytically merge the first and third fair
use factors by referring to iParadigms’ transformative use of
the students’ works. Plaintiffs’ argument, in fact, fails to rec-
ognize the overlap that exists between the fair use factors. The
18 A.V. v. IPARADIGMS, LLC
first and third factors, for example, take into account to some
degree the purpose of the disputed use. Compare 17 U.S.C.
§ 107(1); and Sundeman, 142 F.3d at 202 (explaining that
"[t]he ‘further purpose’ and ‘different character’ of [the
defendant’s use] make it transformative" under § 107(1)),
with Bond, 317 F.3d at 396 (concluding that § 107(3) did not
favor plaintiffs because the defendant’s "sole purpose and
intent" was not to use the expressive content in the plaintiffs’
works but "to obtain admissions of fact" in a court proceed-
ing). We find no error in the district court’s analysis.
Fourth Factor
Finally, § 107 directs us to examine the market of the copy-
righted work to determine "the effect of the use upon the
potential market for or value of the copyrighted work." 17
U.S.C. § 107(4). The Supreme Court described this factor as
the "single most important element of fair use," Harper &
Row, 471 U.S. at 566, considering that a primary goal of
copyright is to ensure that "authors [have] the opportunity to
realize rewards in order to encourage them to create." Leval,
Toward a Fair Use Standard, 103 Harv. L. Rev. at 1124. By
contrast, "a use that has no demonstrable effect upon the
potential market for, or the value of, the copyrighted work
need not be prohibited in order to protect the author’s incen-
tive to create." Sony, 464 U.S. at 450.
Our task is to determine whether the defendants’ use of
plaintiffs’ works "would materially impair the marketability
of the work[s] and whether it would act as a market substi-
tute" for them. Bond, 317 F.3d at 396. We focus here not
upon "whether the secondary use suppresses or even destroys
the market for the original work or its potential derivatives,
but [upon] whether the secondary use usurps the market of the
original work." NXIVM Corp. v. The Ross Institute, 364 F.3d
471, 482 (2nd Cir. 2004) (emphasis added). An adverse mar-
ket effect, in and of itself, does not preclude application of the
fair use defense. "The fair use doctrine protects against a
A.V. v. IPARADIGMS, LLC 19
republication which offers the copyrighted work in a second-
ary packaging, where potential customers, having read the
secondary work, will no longer be inclined to purchase again
something they have already read." Sundeman, 142 F.3d at
207 (internal quotation marks omitted).
The analysis of whether the disputed use offers a market
substitute for the original work overlaps to some extent with
the question of whether the use was transformative. See
Campbell, 510 U.S. at 591 (distinguishing a secondary use
that simply duplicates an original work in its entirety, thereby
superseding it, from a secondary use that is transformative).
To the extent this issue arises in fair use cases, it often does
so when the secondary use at issue involves a scholarly cri-
tique or parody of the original work. See Campbell, 510 U.S.
at 592 ("[T]he role of the courts is to distinguish between bit-
ing criticism that merely suppresses demand and copyright
infringement, which usurps it." (internal quotation marks and
alterations omitted)); see also Sundeman, 142 F.3d at 207
(holding that defendant’s critique of a novel "did not have the
purpose or effect of supplanting the copyrighted work" and
that its use of the novel was transformative and thus did not
create a market substitute for the original work); Davis v. The
Gap, Inc., 246 F.3d 152, 175 (2d Cir. 2001) (explaining that
"[i]f the harm resulted from a transformative secondary use
that lowered the public’s estimation of the original (such as a
devastating review of a book that quotes liberally from the
original to show how silly and poorly written it is), this trans-
formative use will be found to be a fair use, not withstanding
the harm").
But regardless of whether the defendant used the original
work to critique or parody it, the transformative nature of the
use is relevant to the market effect factor. See Suntrust Bank
v. Houghton Mifflin Co., 268 F.3d 1257, 1274 n.28 (11th Cir.
2001) ("Whereas a work that merely supplants or supersedes
another is likely to cause a substantially adverse impact on the
potential market of the original, a transformative work is less
20 A.V. v. IPARADIGMS, LLC
likely to do so." (internal quotation marks omitted)); Davis,
246 F.3d at 176 (noting that "the market effect must be evalu-
ated in light of whether the secondary use is transformative").
The district court concluded that iParadigms’ Turnitin sys-
tem did not serve as a market substitute or even harm the mar-
ket value of the works, highlighting the deposition testimony
of the plaintiffs — each of whom denied that iParadigms’
"impinged on the marketability of their works or interfered
with their use of the works." J.A. 58. The district court also
noted that, although the pleadings alleged iParadigms’ use
would adversely impact plaintiffs’ ability to market their
works to other high school students seeking to purchase com-
pleted term papers or essays, each plaintiff indicated that such
transactions were dishonest and that he or she would not sell
their original works for submission by other students.
Furthermore, the court rejected plaintiffs’ contention that
iParadigms’ use would adversely impact the value of the
works if a recipient such as a college admissions department
or a literary journal used the Turnitin system to verify origi-
nality. Because their works are now archived, plaintiffs
argued, the Turnitin system would report that their own origi-
nal works were plagiarized. In light of how the Turnitin sys-
tem works, the district court rejected the argument as
speculative at best:
Anyone who is reasonably familiar with Turnitin’s
operation will be able to recognize that the identical
match is not the result of plagiarism, but simply the
result of Plaintiff’s earlier submission. Individuals
familiar with Turnitin, such as those in the field of
education, would be expecting the works submitted
to have been previously submitted.
J.A. 59.
A.V. v. IPARADIGMS, LLC 21
On appeal, plaintiffs’ primary contention is that the district
court focused on whether there was evidence of actual dam-
ages, failing to consider the effect of iParadigms’ use on the
"potential market" for plaintiffs’ works.6 Clearly, this asser-
tion is incorrect. The district court considered the potential
market effects suggested by plaintiffs but concluded that
plaintiffs’ arguments were theoretical and speculative. Plain-
tiffs’ most plausible theory was that iParadigms’ archiving of
their papers impaired the sale of the papers to high school stu-
dents in the market for unpublished term papers, essays and
the like. Undoubtedly, there is a market for students who wish
to purchase such works and submit them as their own for aca-
demic credit.7 And, iParadigms’ archiving of such papers on
the Turnitin website might well impair the marketability of
such works to student buyers intending to submit works they
did not author without being identified as plagiarists.
As noted by the district court, however, the plaintiffs testi-
fied that they would not sell the works at issue here to any
dealer in such a market because such a transaction would
make them party to cheating and would encourage plagiarism.
Furthermore, to the extent that iParadigms’ use would
adversely affect plaintiffs’ works in this particular market, we
must consider the transformative nature of the use. Clearly no
market substitute was created by iParadigms, whose archived
student works do not supplant the plaintiffs’ works in the
"paper mill" market so much as merely suppress demand for
them, by keeping record of the fact that such works had been
previously submitted. Cf. Davis, 246 F.3d at 175 (noting that
fair use occurs where "the harm resulted from a transforma-
6
Plaintiffs note emphatically that the fourth statutory fair use factor
"specifically uses the word ‘potential’ . . . and nowhere uses the word
‘damage.’" Brief of Appellants at 29. This point of emphasis is somewhat
ironic in that the district court did not use the word "damage" either, but
did discuss potential market effect.
7
Web sites such as www.ibuytermpapers.com, for example, offer com-
pleted papers and essays purchased from high school students.
22 A.V. v. IPARADIGMS, LLC
tive secondary use that lowered the public’s estimation of the
original" rather than from a market substitute). In our view,
then, any harm here is not of the kind protected against by
copyright law.
The plaintiffs offer a few additional theories under which
iParadigms’ use of their papers could conceivably affect mar-
ketability. For example, plaintiffs point to the possibility that
if they submitted all or a portion of their own works to a peri-
odical for publishing or to a college admissions board, and the
magazine or college used Turnitin, then their submitted works
might potentially be discredited as a product of plagiarism.
Like the district court, we conclude that these theories are
implausible in light of how the Turnitin system generally
operates. We find nothing in the record to suggest that any of
these scenarios envisioned by plaintiffs are anything more
than unfounded speculation.
In sum, we conclude, viewing the evidence in the light
most favorable to the plaintiffs, that iParadigms’ use of the
student works was "fair use" under the Copyright Act and that
iParadigms was therefore entitled to summary judgment on
the copyright infringement claim.8
III. iParadigms’ Cross Appeal
A.
iParadigms asserted a counterclaim against plaintiff A.V.
under the Computer Fraud and Abuse Act ("CFAA"), see 18
U.S.C. § 1030, a statute generally intended to deter computer
hackers.9 Although the CFAA is primarily a criminal statute,
8
In light of our "fair use" analysis, we decline to address the question
of whether the terms of the Clickwrap Agreement created an enforceable
contract between plaintiffs and iParadigms.
9
See, e.g., Charlotte Decker, Note, Cyber Crime 2.0: An Argument to
Update the United States Criminal Code to Reflect the Changing Nature
of Cyber Crime, 81 S. Cal. L. Rev. 959, 980-81 (2008) ("The CFAA,
§ 1030(a)(5), is the primary tool used to investigate and prosecute hacking
crimes.").
A.V. v. IPARADIGMS, LLC 23
it permits private parties to bring a cause of action to redress
a violation of the CFAA: "Any person who suffers damage or
loss by reason of a violation of this section may maintain a
civil action . . . to obtain compensatory damages and injunc-
tive relief or other equitable relief." 18 U.S.C. § 1030(g).
iParadigms alleged that by gaining unauthorized access to
Turnitin through a password assigned to UCSD students,
plaintiff A.V. violated § 1030(a)(5)(A)(iii), which prohibited
any person from "intentionally access[ing] a protected com-
puter without authorization, and as a result of such conduct,
caus[ing] damage," and, by such conduct, caused, in violation
of § 1030(a)(5)(B)(i), "loss to 1 or more persons during any
1-year period . . . aggregating at least $5,000 in value." Addi-
tionally, the CFAA imposed this limit: "Damages for a viola-
tion involving only . . . [§ 1030(a)(5)(B)(i)] are limited to
economic damages." 18 U.S.C. § 1030(g) (emphasis added).10
iParadigms offered evidence that when it learned that A.V.
was able to register and submit papers as a student of a uni-
versity in which he was not enrolled and had never attended,
it feared the possibility of a technical glitch in the Turnitin
system and concluded an investigation was necessary.
Unaware that A.V. had simply obtained a password posted on
the Internet, iParadigms assigned several employees to deter-
mine what happened. According to iParadigms, over the
course of about one week, numerous man-hours were spent
responding to A.V.’s use of the UCSD password.
The district court concluded that iParadigms’ counterclaim
failed as a matter of law because § 1030(g) limited damages
10
The CFAA was amended after the district court issued its decision in
this case. See Pub.L. 110-326, § 204(a). These amendments largely reor-
ganized § 1030, but left subsection (g) essentially intact and do not bear
upon the limited issue before the panel — whether the district court cor-
rectly interpreted "economic damages" as that terms is used in § 1030(g).
We take no position, of course, as to what effect, if any, the amendments
otherwise have on the legal sufficiency of iParadigms’ CFAA counter-
claim.
24 A.V. v. IPARADIGMS, LLC
for a violation of § 1030(a)(5)(B)(i) to "economic damages."
The court found that iParadigms "failed to produce any evi-
dence of actual or economic damages," J.A. 64, and "only
presented evidence of consequential damages resulting from
the steps taken by iParadigms in response to A.V.’s submis-
sions." J.A. 63. Implicit in the district court’s conclusion was
the assumption that "economic damages" in § 1030(g) does
not encompass any "consequential damages" whatsoever.
iParadigms counters that "economic damages" ought to be
accorded its ordinary meaning, which would include conse-
quential damages but exclude recovery for pain and suffering
or emotional distress. See Creative Computing v. Getload-
ed.com LLC, 386 F.3d 930, 935 (9th Cir. 2004) (concluding
that the "economic damages" limitation "precludes damages
for death, personal injury, mental distress, and the like" but
includes "loss of business and business goodwill"). We agree
that the district court construed the "economic damages" pro-
vision too narrowly. To maintain a civil action under the
CFAA, a person first must have "suffer[ed] damage or loss by
reason of a violation of this section." 18 U.S.C. § 1030(g).
The CFAA defines "loss" as "any reasonable cost to any vic-
tim, including the cost of responding to an offense, conduct-
ing a damage assessment, and restoring . . . the system . . . to
its condition prior to the offense, and any revenue lost, cost
incurred, or other consequential damages incurred because of
interruption of service." 18 U.S.C. § 1030(e)(11) (emphasis
added). This broadly worded provision plainly contemplates
consequential damages of the type sought by iParadigms —
costs incurred as part of the response to a CFAA violation,
including the investigation of an offense. See, e.g., Modis, Inc.
v. Bardelli, 531 F. Supp. 2d 314, 320 (D. Conn. 2008) (noting
that "the costs of responding to the offense are recoverable"
including "costs to investigate and take remedial steps" (inter-
nal quotation marks omitted)); SuccessFactors, Inc. v. Softs-
cape, Inc., 544 F. Supp. 2d 975, 980-81 (N.D. Cal. 2008)
(holding that the cost of investigating and identifying the
CFAA offense, including "many hours of valuable time away
A.V. v. IPARADIGMS, LLC 25
from day-to-day responsibilities, causing losses well in excess
of $5,000," qualified as "cost[s] of responding to an offense"
under § 1030(e)(11)).
Accordingly, we remand for further consideration of this
claim, expressing no opinion as to whether the evidence is
otherwise sufficient to establish a viable CFAA claim or
whether the alleged consequential damages were reasonable,
sufficiently proven, or directly causally linked to A.V.’s
alleged CFFA violation.
B.
iParadigms asserted another counterclaim against plaintiff
A.V. under the Virginia Computer Crimes Act ("VCCA"),
which provides that "[a]ny person who uses a computer or
computer network, without authority and . . . [o]btains prop-
erty or services by false pretenses . . . is guilty of the crime
of computer fraud." Va. Code Ann. § 18.2-152.3. Moreover,
"[a]ny person who willfully obtains computer services with-
out authority is guilty of the crime of theft of computer ser-
vices." Va. Code Ann. § 18.2-152.6. Section 18.2-152.12
provides that "any person whose property or person is injured
by reason of a violation of [the VCCA] . . . may sue therefor
and recover for any damages sustained and the costs of suit."
The factual basis for this counterclaim was essentially the
same as that for the CFAA counterclaim — that A.V., a Vir-
ginia resident, obtained access to the Turnitin service by using
passwords and enrollment codes that A.V. did not have autho-
rization to use. The district court granted summary judgment
to A.V. on iParadigms’ VCCA claim, as it had on the CFAA
claim, based on its conclusion that iParadigms failed to pre-
sent evidence of actual or economic damages caused by
A.V.’s submission of papers as a UCSD student.
iParadigms contends that because the district court rejected
the CFAA and the VCCA counterclaims for the same reasons,
the district court was necessarily construing the phrase "any
26 A.V. v. IPARADIGMS, LLC
damages" under the VCCA to exclude consequential dam-
ages. iParadigms suggests that there is no indication in the
statute that the Virginia General Assembly intended to so
limit the meaning of "any damages." Finding nothing in the
statute to suggest that consequential damages are not available
under section 18.2-152.12, we agree that it was error to dis-
miss the VCCA claim solely on this basis. Moreover, we
decline A.V.’s invitation to affirm on other grounds, such as
the lack of evidence to establish a causal link between the
submission of A.V.’s paper and any damages, consequential
or otherwise.
We conclude that the evidence of consequential damages
presented by iParadigms came within the "any damages" lan-
guage of the VCCA, and therefore that the district court erro-
neously granted summary judgment because there was no
evidence of "actual or economic damages." We express no
opinion, however, as to whether iParadigms is a "person
whose property or person is injured by reason of a violation
of [the VCCA]," Va. Code Ann. § 18.2-152.12, or whether
this claim is otherwise viable.
IV.
For the foregoing reasons, we affirm the order of the dis-
trict court granting summary judgment to iParadigms as to
plaintiffs’ copyright infringement claim. As to iParadigms’
counterclaims, however, we reverse the grant of summary
judgment to plaintiffs and remand for further consideration.
AFFIRMED IN PART,
REVERSED IN PART,
AND REMANDED