This landmark case deals with the concepts of digital sampling and fair use.  Video Pipeline, a video promotion company, created trailers of home videos to be shown in stores.  These videos, intended to benefit the store's sales, were shown in the store and consisted of film clips acquired from the film distributors.  Video Pipeline continued this practice until 1997 when it considered the internet as a bigger, better, and more efficient way of distributing these previews.  It viewed its idea as a sort of sampling; much like a person can often sample a few pages of a book in a bookstore before buying it, they wanted to make short clips of movies available for preview before purchase.

After a few years of this distribution, Disney told Video Pipeline to stop.  However, Video Pipeline thought it was within their rights of fair use to distribute these clips and thus filed a lawsuit asking the court to declare that these rights were in fact theirs.  Disney countersued for $100 million in damages.  The court ruled in favor of the defendant, Disney, and claimed that because the trailers were compiled of exact clips, they were derivative works illegal under the law.  In addition, the Plaintiff was ruled as violating performance and public display laws.  Last but definitely not least, the court ruled that the trailers did not fall under the argument of fair use for lack of adherence to the factors of fair use, which are as follows: (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 for the copyrighted work.

This once again justifies the fear of filmmakers to borrow from copyrighted material, despite possible claims of fair use, because as is exemplified here, even a small borrowing of a film clip can cost millions.