• by Wendy Davis , Staff Writer @wendyndavis, October 15, 2015

Online humor company Equals Three, which posts short videos on YouTube, has the fair use right to create and display clips that incorporate short viral videos owned by a different company, a federal judge has ruled.

In an opinion issued this week, U.S. District Court Judge Stephen Wilson in the Central District of California said that many of Equals Three's videos made fair use of the material hosted by digital media company Jukin Media. "Equals Three’s episodes directly respond to and highlight humorous aspects of Jukin’s videos," Wilson wrote.

The decision stems from a complaint filed by Equals Three in November of 2014, when it sought declaratory judgment that it wasn't infringing Jukin's copyright.

Jukin obtains the rights to viral videos uploaded by consumers and makes the clips available on its own site and on YouTube. Equals Three then draws on and incorporates some of those clips in its own episodes.

For instance, the Equals Three episode "Like a Girl" drew on a video clip called "Disney World Surprise Gone Wrong," available through Jukin's platform.

The original viral video featured the reaction of two children who learn they're going on a trip to Disney World. The girl shrieks with delight, while her younger brother starts to cry.

In the Equals Three clip, a host shows the key portion of the original clip, and then comments on it: "Like, is this a viral video, or just the best Six Flags advertisement ever," the host asks.

The company alleged in its complaint that Jukin had filed 41 notices of copyright infringement with YouTube. Equals Three said the clips were reinstated after it contested the notices, but that it was deprived of at least a portion of ad revenue it would otherwise have gleaned. "Jukin continues to completely cut off Equals Three revenues from YouTube simply by filing copyright infringement claims," Equals Three alleged in its initial complaint.

Jukin countered that Equals Three infringed copyright by using Jukin-owned clips, and sought summary judgment against Equals Three.

Wilson examined 19 Jukin clips that were incorporated by Equals Three and found that all but one were protected by fair use.

"The host’s narration does not simply recount what is shown in Jukin’s videos; instead the host makes comments about Jukin’s videos that highlight their ridiculousness by creating fictionalized narratives of how the events transpired, using similes, or by directly mocking the depicted events and people," Wilson wrote.

The lone clip that was't protected by fair use incorporated a viral video showing the first person in Perth to obtain the iPhone 6 opening the package and dropping the device.

Equals Three said the footage was used to make the points "don't be first," and that Apple's "method of packaging iPhones at the top of the box is absurd," according to court papers.

Wilson found that explanation showed that the clip's use wasn't transformative. "Equals Three thus admits that its purpose of using Jukin’s video was to make two general, broad points that were not directly aimed at criticizing or commenting on the video," he wrote.