In another fairly big copyright decision by a federal court of appeals, another seeming technological innovation in the digital space was viewed as copyright infringement. The Court of Appeals for the Second Circuit ruled in Fox News Network, LLC v. TVEyes, Inc.,[1] on February 27, 2018, in a case that will most likely have broader implications for companies that aggregate news snippets.
The facts are as follows.
TVEyes aggregates news clips from various news sources, including Fox News. Its news aggregator records news broadcasts from nearly 1,400 channels, recording content 24 hours a day, and storing that recorded content in its own database. Further, a searchable transcript is created from that broadcast, and also stored as part of that database. The database is then searchable based on the text; the user can gather a list of returned items, which a 10-minute clip of the broadcast can then be viewed. In addition, these videos can be archived, downloaded, and emailed to others. For purposes of analytical simplicity, the Second Circuit panel divided the searching features as the “Search” function, and the viewing, archival, downloading, and emailing features as the “Watch” function. Since Fox did not appeal the district court’s ruling on the Search function, it was not part of the appellate record. Therefore, only the “Watch” function is analyzed and discussed by the panel.
The Copyright Act states:
[T]he fair use of a copyright 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 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.[2]
Each factor is analyzed separately, then the results are further analyzed together in light of the infringed copyright and its purposes.[3]
As to the first factor, the purpose and character of the use, the analysis must first begin with whether the use was “transformative.”[4] Transformative means the use must more than just merely republish or repackage the original copyrighted work, adding something new with a different character or purpose to the new work, and altering the original work with a “new expression, meaning, or message.”[5]
The panel compared the TVEyes database with the Google database in the Google Books case. In Google Books, Google culled various digital copies of copyrighted books into a text-searchable database. The database could be searched and the results returning a list of snippets for the user to review. That Second Circuit panel found the use transformative because it “communicated something new and different from the original.” Further, the snippet views “added important value to the basic transformative search function” by allowing users to verify the books returned by the search were, in fact, what the user was searching for.[6] Likewise, the panel found TVEyes’ Watch function similarly transformative because it enabled a user to:
isolate, from an ocean of programming, material that is responsive to their interests and needs, and access that material with targeted precision. It enables nearly instant access to a subset of material – and to information about the material – that would otherwise be irretrievable, or else retrievable only through prohibitively inconvenient or inefficient means.[7]
However, notwithstanding, commercial use of the transformed use must also be reviewed into the first factor analysis. Here, Fox News had argued that TVEyes’ commercial nature of its database negated its transformative use. Here, the panel seemed to strain to find commercial use an issue with transformation; it did note that because TVEyes charges a subscription to view the Watch function content, and that content was essentially the same as the original Fox News’ broadcasts, TVEyes’ use was minimally transformative and did not present a new expression, meaning or message. The panel, nonetheless, found this factor narrowly to TVEyes.
As to the second factor, the copyrighted work’s nature, the panel noted that it was of minimal significance. The fact that the work involved news, or factual data, as opposed to a piece of fiction like a novel or a play, was not determinative because news reporting is still afforded some copyright protection. As such, the owner of that news broadcast would still be lawfully able to require permission before re-use of that broadcast. This factor went to Fox News.
As to the third factor, or the amount and substantiality of to copyrighted work used as a whole, the panel noted that the proper analysis is how much the copyrighted work was disseminated to the public versus the amount used by the copying party.[8] Here, the panel noted that TVEyes made all Fox programming available to a TVEyes subscribing user. While a user could only see 10-minute snippets of the Fox broadcasts at a time, it was deemed enough because many news viewers can get all the necessary news they need in just that amount of time.[9] This factor weighed heavily to Fox News.
As to the final factor, the market effect of the copying, the panel reviewed the market harm of TVEyes’ copying on Fox News. The panel determined that the copying was detrimental to Fox News in the amount of millions of dollars in potential licensing and broadcast fees.
In short, by selling access to Fox’s audiovisual content without a license, TVEyes deprives Fox of revenues to which Fox is entitled as the copyright holder.[10]
The fourth factor, therefore, weights in favor of Fox News.
In finding in the aggregate that TVEyes did not have a fair use defense, the panel remanded to the district court to revise the permanent injunction consistent with the ruling.
No doubt the implications of this case will be broadly felt in the streaming industry. There are some detractors, including the EFF, which have found this ruling to be problematic because it goes against what fair use is – that is, use of copyrighted material without the copyright owner’s permission. However, what the ruling does do is require news aggregators to seek permission from the copyright owners for use of copyrighted material. It that sense, it places technology on the same playing field as other industries when having to adhere to intellectual property laws.
Further, TVEyes’ product will not suffer if it obtains a license from Fox News for re-use of its broadcasting. The license fee would no doubt be passed on to the subscribers. Commentary, criticism, opinion, and other important indicia of a free press would still exist. In a much broader sense, the ruling is reflective of the recent hits tech companies with innovative uses to bring information to the consumer have taken. TVEyes’ competitor Meltwater lost a space shifting fair use case in 2013 to Associated Press. The MPAA won a copyright infringement suit against a Chinese streaming video company. TickBox TV’s set top box technology has been sued by several Hollywood studios. Finally, Spotify is facing a billion-dollar lawsuit filed on December 31, 2017 for copyright infringement of musical composition compulsory licenses.
It is likely that this ruling will be appealed to the U.S. Supreme Court, although whether it will grant certiorari remains a big question mark.
[1] F.3d (2d Cir. 2018), No. 15-3885 (Feb. 27, 2018) (slip op.).
[3] See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577-78 (1994).
[4] See Authors Guild v. Google, Inc. (Google Books), 804 F.3d 202, 214 (2d Cir. 2015).
[5] See Authors Guild v. HathiTrust, 755 F.3d 87, 96 (2d Cir. 2014).
[6] See Google Books, supra, 804 F.3d at 217-18.
[7] See Fox News, supra (slip op. at 12).
[8] See Google Books, supra, 804 F.3d at 222.
[9] As the panel noted, cf. Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 564-65 (no fair use when copying was only 300 words, but the portion copied was the “heart of the book.”).
[10] Fox News, supra (slip op. at 17).