What constitutes 'Fair Use' of copyrighted material

What constitutes ‘Fair Use’ of copyrighted material as defined in law?
Does a site have to abide by the legal system of the country given in its
registered trading address or that of the country where the web server is physically?

Fair use of copyrighted material includes commentary, criticism, news reporting, research, teaching, library archiving and scholarship.

As for what legal system you need to abide by it would be both.

Fair use isn’t so much ‘defined’, it’s a ‘defence’ you can attempt to use in a court of law. You would ‘argue’ fair use and present your reasoning. Ultimately it’s up to a judge to decide if it’s actually fair use.

You can try to define your preferred jurisdiction in your site’s terms of service, but as the USA is showing with their actions against, for example, Spanish or UK sites engaging in practices that are completely legal in their respective countries, US jurisdiction is being claimed for reasons such as ‘it’s a .com’, or ‘it targets people in the US’, ‘it contains copyrighted material from US corporations’ etc. So there is no definitive answer to that issue either. I also believe in the case of ecommerce transactions, many states in the US consider jurisdiction to be where the customer resides.

Fair Use has been around for centuries and the courts have developed a 4 part test that has also become part of the legislation itself which must be met before relying on that defense to copyright infringement.

Below is an excerpt from the U.S. copyright law explaining Fair Use.

§ 107. Limitations on exclusive rights: Fair use

Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(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.
The 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.

Fair Use is a complicated subject because it is so subjective. If you would like to chat about Fair Use please feel free to call me for a free discussion.

Also in order to use ‘fair use’ as a defence you must first admit to having copied the copyright material. Which means that if the judge decides that it isn’t fair use then you have already admitted to having breached the copyright.

In Australia copying of at most one chapter or 10% (whichever is the smaller) by journalists and teachers for use in relation to their job is the maximum that can be considered as fair use. Copying for other purposes is seldom considered to be fair use and copying more than one chapter or 10% is never considered to be fair use.