IP Law Daily, COPYRIGHT—S.D. N.Y.: Source Digital’s fair use defense in copyright dispute rejected, (Apr 7, 2026)

By Carolin Dennis, B.Sc., LL.B., LL.M.

Applying the fair use factors here, the court concluded that Source Digital’s fair use defense failed as a matter of law.

A federal district court in New York determined that the copyright holder was entitled to summary judgment as to liability on its copyright infringement claim on the use of the photograph depicting the cast of the television show Martin because Source Digital, Inc. failed to prove that its affirmative fair use defense warranted dismissal of the claim. The district court noted that Source Digital’s copying usurped the market for the subject photographs in a manner that, if it were to become widespread, would do significant damage to the rights of professional photographers (Source Digital, Inc v. Michael Grecco Productions, Inc., No. 1:24-cv-02377-JAV (S.D.N.Y. Mar. 31, 2026)).

Background. Michael Grecco (Grecco) is a photographer and author, and the founder and principal of Michael Grecco Productions, Inc. (MGP). Grecco regularly assigns the rights to his photographs to MGP, which is responsible for licensing the works to interested third parties. In 2009, Grecco took a photograph depicting the cast of the television show Martin (Photograph). Grecco assigned all his rights in the Photograph to MGP. The Photograph was registered by the U.S. Copyright Office under Registration No. VA 1-431-698 on July 7, 2010. Source Digital, Inc. (Source Digital) is a privately owned New York corporation formed in 2014 that services the digital platform associated with The Source magazine, at www.thesource.com (Website). The Website publishes current news and commentary related to hip hop culture, as well as arts, music, politics, sports, and other issues relevant to the Black community. Source Digital also operates an associated Instagram account, @thesource (Instagram Account). On or about September 12, 2020, the Instagram Account posted four photographs, displayed in a grid, each depicting the cast of a television show (Post).

Neither Grecco nor MGP granted Source Digital a license to use the Photograph. Grecco became aware of the post in 2024, and in February 2024 contacted Source Digital to advise them of the unauthorized use of the Photograph and request that they enter into a retroactive licensing agreement. Source Digital took down the Post, and the parties engaged in settlement negotiations. However, those negotiations broke down, and Source Digital filed an action seeking a declaratory judgment that it had not infringed MGP’s copyright. MGP filed a motion for summary judgment as to liability on its copyright infringement counterclaims and sought the dismissal of Source Digital’s declaratory judgment action.

Fair use defense. Source Digital argued that the Post is protected under the fair use doctrine. In analyzing the Source Digital’s fair use claim, the district court utilized four non-exclusive factors: (1) the purpose and character of the use; (2) the nature of the 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 copyrighted work.

First fair use factor. The district court noted that Photograph as it appears in the Post is completely unaltered. No legitimate justification is offered for the copying of the Photograph. The Post does not comment on the Photograph, provide criticism of the Photograph, parody the Photograph, or provide news reporting on the Photograph. Nor is this a circumstance in which valuable information is being conveyed to the public about a work that is not otherwise accessible to the public. Rather, the Photograph is used for illustrative purposes, to depict the cast of the television program Martin.

Source Digital argued that the Post had a different purpose than the Photograph. When taken, the Photograph served as a promotional shot for a television show that was airing on television. The Post, in contrast, groups the Photograph with three other cast photos, in a composite picture. It thereby presents the image in a new context, which “evokes the historical and cultural significance of these four shows that each featured predominantly Black characters... and provided Black representation in television, where it had been lacking.” The district court found that the fact that the Post as a whole communicated a different message than the original Photograph does not render it transformative. Source Digital’s use of the Photograph to illustrate the cast of the television show Martin in a post concerning 1990s television shows is substantially similar to the purpose of the original Photograph. The mere addition of some “token commentary” to the Photograph does not transform the copyrighted work. Accordingly, the first fair use factor weighed in favor of MGP because the district court determined that the republication of the Photograph does not have a different purpose or different character than the original.

Second fair use factor. Under the second fair use factor, courts consider the nature of the copyrighted work, including: (1) whether it is expressive or creative or more factual, with greater leeway being allowed to a claim of fair use where the work is factual or informational, and (2) where the work is published or unpublished, with the scope of fair use involving unpublished works being considerably narrower. The district court noted that the Photograph reflects the creative choices of Grecco, including the positioning of the actors and the setting used. Accordingly, the district court concluded although the Photograph was already published (a fact which favored Source Digital), overall the second fair use factor slightly favored MGP.

Third fair use factor. The third factor compares the portion of the use with the copyrighted work as a whole to determine if it is “reasonable in relation to the purpose of the copying.” The district court noted that since Source Digital’s use was not transformative, it follows that its use of the entire Photograph was not necessary. That said, this factor “weighs less when considering a photograph—where all or most of the work often must be used in order to preserve any meaning at all—than a work such as a text or musical composition, where bits and pieces can be excerpted without losing all value.” Accordingly, the district court held that the third fair use factor favored MGP, but again only slightly.

Fourth fair use factor. This factor considers whether the copy brings to the marketplace a competing substitute for the original, or its derivative, so as to deprive the rights holder of significant revenues because of the likelihood that potential purchasers may opt to acquire the copy in preference to the original. The district court noted that there is a presumption of market harm when the use of the work is not transformative. This is because “the more copying is done to achieve a purpose that is the same as or substantially similar to the original, the more likely it is that the copy will serve as a satisfactory substitute for the original.” Source Digital attempted to rebut this presumption by pointing to undisputed evidence that MGP has never licensed the Photograph and has not lost any business as a result of the publication of the Photograph. According to Source Digital, there was no usurpation of the market, because there was no market to usurp.

The district court rejected Source Digital’s argument and noted that there would be no need for media outlets to license photographs if each outlet could appropriate a copyrighted work without prior authorization from the copyright owner. Additionally, the fact that Source Digital published the Photograph on its Instagram account indicates that “there is a plausibly exploitable market for photographers to license photographs to organizations like [Source Digital] for use on its online platforms.” Accordingly, the district court found that the fourth fair use factor weighed in favor of MGP.

Based on the four fair use factors, the district court held that Source Digital’s fair use defense failed as a matter of law and MGP’s motion for summary judgment was granted.

The Case is No. 1:24-cv-02377-JAV.

Judge: Vargas, J.

Attorneys: Matthew Fontaine Abbott (Kramer, Levin, Naftalis & Frankel LLP) for Source Digital, Inc. Joshua D. Vera (Sanders Law Group) for Michael Grecco Productions, Inc.

Companies: Source Digital, Inc.; Michael Grecco Productions, Inc.

Cases: Copyright NewYorkNews