Big Win For Fair Use (Even When For Profit), Big Loss For 'Hot News' & Fox

[Mike]

Well, here's a nice surprise. The Federal Court in the Southern District of NY has issued another very nice ruling on copyright issues relating to fair use. As we'd mentioned last year, Fox had sued the company TVEyes claiming copyright infringement. TVEyes is a media monitoring company that records tons of TV and radio, creates transcripts of it all and makes it searchable for internal use. Customers include the White House, Congress and a variety of news services, including the NY Times. Fox is Fox. It insists that what TVEyes is doing is infringement and that it violates the hot news doctrine (the silly, obsolete, court-made law that says news reporters have some non-copyright proprietary right to breaking news they first publish).

Judge Alvin Hellerstein, however, is not buying Fox's argument. Why? Fair use. The Court goes through the typical four factors test and finds them to pretty squarely put TVEyes' usage into the "fair use" camp.

1. Purpose and character of the use: Goes to TVEyes following a very long discussion. Even though it's a "for profit" company, the court says that its transformative and fits with the stated purpose of fair use. The court relies heavily on the recent book scanning decisions that found that scanning full books to make searchable indexes is transformative fair use. That's good. It also points to the recent Swatch v. Bloomberg case, in which a full transcript of an investor call was considered fair use, even if for commercial reasons. The court admits that the Meltwater case may be the one that goes against this, but notes that it's basically the only one (adding emphasis to our belief that Meltwater was decided incorrectly). The growing consensus appears to be that indexing content to make it more findable is transformative fair use, and the court agrees in this case:

   I find that TVEyes' search engine together with its display of result clips is transformative and "serves a new and different function from the original work and is not a substitute for it." ... In making this finding, I am guided by the Second Circuit's determination that databases that convert copyrighted works into a research tool to further learning are transformative. TVEyes' message, "'this is what they said' -- is a very different message from [Fox News'] -- 'this is what you should [know or] believe.'" ... TVEyes' evidence, that its subscribers use the service for research, criticism, and comment, is undisputed and shows fair use as explicitly identified in the preamble of the statute.

   
   
2. The nature of the copyrighted work: Here the judge finds neither side wins the fair use debate. Basically, he says "where the creative aspect of the work is transformed, as is the case here, the second factor has limited value."
   
   
   
3. The amount and substantiality of the portion used: Once again, neither side wins. The court says, yes, obviously, TVEyes is using all of Fox's TV content, but rather than taking the simple way out, recognizes (as other courts have) that this is really not about the total amount used, but the amount used in relation to the amount necessary to use. And thus, in this case, using everything is necessary, given what TVEyes is trying to do. As the court notes, "TVEyes' service requires complete copying twenty-four hours a day, seven days a week."
   
   
   
4. The effect of the use upon the potential market for the value of the copyrighted work: This one goes to TVEyes again. As the court notes, the economic harm here has to be based on whether or not TVEyes is acting as a substitute, and not based on any economic harm created by the transformative use (i.e., not from a market that Fox isn't serving). The court notes that Fox speculates that people might use TVEyes to avoid watching Fox directly, but has no evidence to support that: "Fox News' allegations assume that TVEyes' users actually use TVEyes as a substitute for Fox News' channels. Fox News' assumption is speculation, not fact. Indeed, the facts are contrary to Fox News' speculation." More specifically:

   First, none of the shows on which Fox News' suit is based remain available to TVEyes subscribers; TVEyes erases content every 32 days. Second, in the 32 days that these programs were available to TVEyes' subscribers, only 560 clips were played, with an average length of play of 53.4 seconds and the full range of play being 11.5 seconds to 362 seconds. Of the 560 clips played, 85.5% of the clips that were played were played for less than one minute; 76% were played for less than 30 seconds; and 51% were played for less than 10 seconds. One program was not excerpted at all. The long term TVEyes statistics are consistent with the specific statistics of the 19 programs. From 2003 to 2014, only 5.6% of all TVEyes users have ever seen any Fox News content on TVEyes. Between March 31, 2003 and December 31, 2013, in only three instances did a TVEyes subscriber access 30 minutes or more of any sequential content on FNC, and no TVEyes subscriber ever accessed any sequential content on FBN. Not one of the works in suit was ever accessed to watch clips sequentially. The record does not support Fox News' allegations. Fox News fails in its proof that TVEyes caused, or is likely to cause, any adverse effect to Fox News' revenues or income from advertisers or cable or satellite providers.

   It goes on in that nature for some time. And then concludes: "No reasonable juror could find that people are using TVEyes as a substitute for watching Fox News broadcasts on television. There is no history of any such use, and there is no realistic danger of any potential harm to the overall market of television watching..."
   

Given all that, the victory goes in a landslide to TVEyes on fair use grounds -- with one exception:

However, I do not decide the issue of fair use for the full extent of TVEyes' service, TVEyes provides features that allow subscribers to save, archive, download, email, and share clips of Fox News' television programs. The parties have not presented sufficient evidence showing that these features are either integral to the transformative purpose of indexing and providing clips and snippets of transcript to subscribers, or threatening to Fox News' derivative businesses.

So that part of the case is likely to go forward (though it may wait while Fox appeals the other part).

The court also tosses out the hot news claim, saying that it's preempted by the copyright claim, and Fox News' attempt to double dip via hot news won't be allowed. It sites a case that says if you're just reposting factual information, it's covered by the Copyright Act. The court notes for TVEyes to run afoul of the hot news doctrine, it would need to be "free riding" in a manner designed to "scoop" Fox's efforts, rather than accurately covering what Fox is broadcasting. "TVEyes is not a valuable service because subscribers credit it as a reliable news outlet, it is valuable because it reports what the news outlets and commentators are saying and therefore does not "scoop" or free-ride on the news service."

In the end, it's a good ruling for fair use (and against hot news), though it seems likely that Fox will appeal.

Originally Published: Wed, 10 Sep 2014 16:08:30 GMT
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