The Wall Street Journal Law Blog has given a report on some of today’s court proceedings.
According to the Law Blog, the heart of this case is the fair-use doctrine which according to the US Copyright Act is explained as follows:
One of the rights accorded to the owner of copyright is the right to reproduce or to authorize others to reproduce the work in copies or phonorecords. This right is subject to certain limitations found in sections 107 through 118 of the Copyright Act (title 17, U. S. Code). One of the more important limitations is the doctrine of “fair use.” Although fair use was not mentioned in the previous copyright law, the doctrine has developed through a substantial number of court decisions over the years. This doctrine has been codified in section 107 of the copyright law.
Section 107 contains a list of the various purposes for which the reproduction of a particular work may be considered “fair,” such as criticism, comment, news reporting, teaching, scholarship, and research. Section 107 also sets out four factors to be considered in determining whether or not a particular use is fair:
the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes;
the nature of the copyrighted work;
amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
the effect of the use upon the potential market for or value of the copyrighted work.
This was discussed in detail today by JKR’s attorney:
After going through the list of correspondence that Cendali argued showed bad faith copying on Vander Ark’s part, she painstakingly detailed the four factors of fair use — the nature of the copyrighted work, the amount of the work copied, the purpose and character of the use, and the effect on the market — arguing that they don’t apply to the Harry Potter Lexicon.
Mostly, Cendali focused on the third factor, belaboring the same phrase over and over again, arguing that the Lexicon “takes too much and does too little.” In other words, she argued, unlike other Harry Potter companion books, which add commentary, analysis and research to Rowling’s work, the Harry Potter Lexicon adds nothing new or original, but merely “rearranges the furniture of Rowling’s novels.” In characterizing the Lexicon as a “reference guide,” Cendali, in her own bit of literary pilferage, concluded that RDR is attempting “to make a silk purse from a sow’s ear.”
When Stanford University’s Anthony Falzone, the inheritor of professor Larry Lessig’s Fair Use Project, took the podium, he gave comparatively short remarks, saying simply that the public will lose out if publication of the Harry Potter Lexicon is enjoined, and arguing that the power Rowling asserts over her fictional world does not translate into power she can assert over companion guides wirtten by others. “Profit was nover the point,” concluded Falzone, Vander Ark wrote the Lexicon out of passion.
As we mentioned previously, Jo took the stand today and spoke quite emotionally and passionately about her feelings on this issue. One interesting tidbit the Wall Stree Journal offered was the following:
“Should my fans be flooded with a surfeit of substandard books — so called lexicons — I’m not sure I’d have the will or heart to continue,” said Rowling, who went on to characterize the H.P. Lexicon as “sloppy,” “lazy,” and “incorrect.”
Personally I don’t know that I would classify the HPL as sloppy, lazy, or incorrect. I think it is a very excellent compendium of the Harry Potter world that I have taken advantage of (and according to many previous reports, so has JKR) quite often. Once again, I don’t know the ins and outs of copyright law and I don’t know who is in the right OR wrong here but to see the badmouthing and deterioration of fan and author relations saddens me the most.
) I have used the Lexicon as a resource countless times. 
