Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508 (2023), is a U.S. Supreme Court case dealing with transformative use, a component of fair use, under U.S. copyright law.

It held Warhol's changes were insufficiently transformative to fall within fair use for commercial purposes, resolving an issue arising from a split between the Second and Ninth circuits among others.

Three years later, Vanity Fair licensed the image for Andy Warhol to use as a reference for a silkscreen illustration of Prince to be published, by agreement with Goldsmith, only once, with her credited.

Justice Sonia Sotomayor wrote for the majority that the works shared a similar purpose in the depiction of Prince in magazine articles, emphasizing the commercial nature of the product.

[3][a] Courts remained uncertain enough that five years later, another federal judge, Pierre Leval, then sitting on the Southern District of New York (SDNY), which hears many copyright cases, wrote a Harvard Law Review article, "Toward a Fair Use Standard", outlining more specific ideas.

[5] Four years later the Supreme Court accepted the concept, citing Leval in Campbell v. Acuff-Rose Music, Inc., a case that settled a longstanding question over whether parody constituted fair use.

In holding that rap group 2 Live Crew's parody of Roy Orbison's "Oh, Pretty Woman", which the publisher had refused to license to them, was not an infringement, the Court held transformative use to be something judges could consider in assessing the first factor.

The case attracted considerable attention in the art world since the Southern District held in Cariou's favor and issued an injunction calling for the most severe remedy available under copyright law: the confiscation and/or destruction of any of Prince's unsold copies of his work, and the exhibition catalogs.

The magazine then commissioned pop-art artist Andy Warhol to create a highly colorized silkscreen using just Prince's head from the photograph, illustrating the feature, "Purple Fame".

Despite having licensed the photograph and agreed to a co-credit in Vanity Fair many years prior, Goldsmith alleged that she had been unaware of the existence of the illustration and the Prince Series until she saw the Condé Nast cover.

He held that Warhol had sufficiently transformed Goldsmith's original photograph under fair use as to show the change of Prince "from a vulnerable, uncomfortable person to an iconic, larger-than-life figure".

[28] "Goldsmith wisely does not contend that Warhol's work has usurped her market for direct sales of [her p]hotograph", Koeltl wrote, beginning to consider the final factor.

[34] A panel consisting of circuit judges Gerard E. Lynch, Dennis Jacobs and Richard J. Sullivan reversed Koeltl's judgement in March 2021, allowing Goldsmith's lawsuit to proceed.

But the film, for all the ways in which it transforms (that is, in the ordinary meaning of the word, which indeed is used in the very definition of derivative works its source material), is also plainly an adaptation of the Lawrence novel.Lynch acknowledged that Warhol had removed some aspects of Goldsmith's photograph.

The Court had also noted that since Google involved computer code, a primarily functional form of writing, its holding might not be so readily applicable to other areas of copyright law where artistic expression was at issue.

[48][41] Lynch also dismissed the Foundation's claim that the earlier decision effectively outlawed an entire genre of art, likening the case to Google's dispute between two software makers.

The issue here does not pit novel forms of art against philistine censorship, but rather involves a conflict between artists each seeking to profit from his or her own creative efforts.Lastly, Lynch considered the Foundation's alternative argument that the district decision be affirmed on the grounds that the two works were not substantially similar.

[49][41] Lynch rejected the Foundation's argument for applying the "more discerning observer" test since that was reserved for media, mostly home decor, that typically contained a mix of copyrightable and non-copyrightable elements, which was not the issue with the photographs before the court.

So he went with the "ordinary observer" test, distinguishing the Prince Series from precedents the Foundation cited by noting that those cases, resolved in the alleged infringer's favor, had involved images that replicated the original work, or had attempted to, rather than being directly derived from it as Warhol's had been.

[50] The Foundation petitioned the Supreme Court to challenge the Second Circuit's ruling, which it called "a sea-change in the law of copyright" that would cast "a cloud of legal uncertainty over an entire genre of visual art.

It said the opinion's insistence that its "conclusion that those images are closer to what the law deems 'derivative' (and not 'transformative') does not imply that the Prince Series (or Warhol’s art more broadly) is 'derivative', in the pejorative artistic sense, of Goldsmith's work or of anyone else's" was disingenuous and could create a chilling effect.

"[53] The Supreme Court granted certiorari for the case in March 2022, to be heard during the following term,[23] deciding whether the Foundation's licensing of Orange Prince to Condé Nast infringed Goldsmith's copyright.

[56] The Court issued its ruling on May 18, 2023, considering only the question of whether the use Condé Nast made of the image licensed from the Foundation could be characterized as transformative in the commercial context, and letting all the Second Circuit's conclusions as to the other factors stand.

[64] Analyzing market substitution as inversely related to transformativeness, she found that similarity of use—both the Foundation and Goldsmith competed to license images to magazines—cut against a finding of fair use.

[70][71] He offered that if the AWF displayed the Prince series "in a nonprofit museum or a for-profit book commenting on 20th-century art, the purpose and character of that use might well point to fair use.

Not only did she reprint both Goldsmith's photograph and Orange Prince, she used other works by Warhol and, in the later sections, paintings by Diego Velázquez, Titian, Giorgione and Francis Bacon to make her points about the historic role of copying and transforming in art.

Kagan accused the majority of deciding the case on the basis of "a marketing decision: In the[ir] view, Warhol's licensing of the silkscreen to a magazine precludes fair use."

"[72] Kagan questioned why the editors of Vanity Fair, and later at Condé Nast, would have chosen Warhol's work if it had indeed added nothing to Goldsmith's photo:[73] All I can say is that it's a good thing the majority isn't in the magazine business.

The image of virtuous artists happily passing around pictures for general improvement belongs more to a progressive kindergarten than to the actual processes of art, which are more often moved by rancor, Oedipal drama, and competitive put-downs.

"[81] Peter Karol in Artforum echoed those concerns, but ultimately interpreted the Court's goal as "a reenergized licensing market for source works used in follow-on art practices.