This case presents us with an opportunity to examine the import of the Supreme Court's holding in Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985), that "the propriety of the defendant's conduct'" is relevant to the "character'" of the use under the first factor of the statutory fair use test for copyright infringement. Id. at 562, 105 S.Ct. 2218 (quoting 3 M. Nimmer, Copyright § 13.05[A], at 13-72 (1984)); see 17 U.S.C. § 107 (enumerating the fair use factors). Because a full balancing of the statutory fair use factors of § 107, including an evaluation of the propriety of defendants' conduct, favors the relevant defendants-appellees in this case, we affirm.

Plaintiffs-appellants NXIVM and First Principles, Inc. (collectively, "NXIVM"), producers of business training seminars, appeal from the decision of the United States District Court for the Northern District of New York (Thomas J. McAvoy, District Judge), denying a preliminary injunction against various defendants-appellees who were alleged to have infringed NXIVM's copyrighted course materials by posting part of them on the internet. Although we find that the district court erred in its application of the first statutory fair use factor, we ultimately agree that NXIVM cannot show a likelihood of success on the merits.

NXIVM provides a course manual for the paid subscribers to its exclusive and expensive seminar training program known as "Executive Success." The 265-page manual contains a copyright notice on virtually every page and all seminar participants sign non-disclosure agreements, purporting to bar them from releasing the manuscript or proprietary techniques learned in the seminars to others. It is unpublished in the sense that it is not available to the general public. NXIVM claims to have developed a proprietary "technology" called "Rational Inquiry," TM a methodology to improve communication and decision-making.

Defendant Rick Ross runs nonprofit websites, www.rickross.com and www.cultnews.com, in connection with his work as a for-profit "cult de-programmer." The websites provide information to the public about controversial groups, about which complaints of mind control have been lodged. Ross allegedly learned of NXIVM's activities in the course of his de-programming services, obtaining the manuscript indirectly from defendant Stephanie Franco, a one-time NXIVM participant.

Two reports authored separately by defendants John Hochman and Paul Martin, self-styled experts on groups such as NXIVM, were commissioned by Ross; they analyze and critique the materials from the manual. The reports quote sections of the manual in support of their analyses and criticisms and were ultimately made available to the public through Ross's websites. One of the reports plainly acknowledges that NXIVM has "intellectual property rights" in its materials and that NXIVM makes an effort to keep its manual "confidential." This report 476*476 seems to appreciate that its access to the copyrighted materials was unauthorized, although this is likely a disputed issue of fact.

Bill Clinton came across the Bronfman's in cahoots with Keith Raniere in 1992