By Thomas Long, J.D.
In a copyright infringement lawsuit brought by Fox News, TVEyes, Inc.—provider of an online service that enabled customers to locate and view the content of recorded and archived radio and television broadcasts—was not protected by the Copyright Act’s fair use defense, the U.S. Court of Appeals in New York City has held. Although TVEyes’ redistribution of Fox’s content served a transformative purpose, TVEyes made available virtually all of Fox’s copyrighted content and deprived Fox of potential licensing revenue to which it was entitled as the copyright holder. A decision of the federal district court in New York City concluding that the fair use doctrine protected TVEyes’ video archiving feature was reversed. Fox did not content the lower court’s finding that the copying of Fox’s closed-captioned text into a text-searchable database was fair use. The case was remanded for entry of a revised injunction barring all of TVEyes’ infringing services (Fox News Network, LLC v. TVEyes, Inc., February 27, 2018, Jacobs, D.).
TVEyes recorded the broadcasts of more than 1,400 radio and television stations and transformed the content of those broadcasts into a searchable database. For a subscription fee of $500 per month, TVEyes’ subscribers could track when, where, and how words of interest were used in the media, and could obtain transcripts and video clips of program segments that used those words.
Fox News Network—the owner and operator of the Fox News Channel and the Fox Business Network—sued TVEyes for copyright infringement. According to Fox, TVEyes was diverting licensees, website visitors, and revenue from Fox by making Fox’s content available to TVEyes subscribers. Fox sought damages and an injunction. The injunction would bar TVEyes from copying and distributing clips of Fox News programs. TVEyes asserted the affirmative defense of fair use.
The district court determined that some of the functions of TVEyes’s service constituted fair use. Specifically, the functions enabling customers to search for videos by term, to watch video clips, and to archive the videos on the TVEyes servers were deemed fair use. Certain other functions were not a fair use, in the district court’s view, such as those enabling TVEyes’s clients to download videos to their computers, to freely email videos to others, or to watch videos after searching for them by date, time, and channel (rather than by keyword). The district court permanently enjoined TVEyes from offering and providing the functions that were outside the scope of fair use.
Both parties appealed. The Second Circuit noted that the appeal shared features with its decision in Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir. 2015) ("Google Books"), in which the Second Circuit held that Google’s creation of a text-searchable database of millions of books was a fair use because Google’s service was "transformative" and because integral features protected the rights of copyright holders, while cautioning that Google’s conduct tested the boundaries of fair use. TVEyes, the court said, had exceeded those bounds.
Purpose and character of use. According to the court, TVEyes’s re-distribution of Fox’s audiovisual content served a transformative purpose in that it enabled TVEyes’s customers to isolate from the body of Fox’s content the specific material in which they were interested, and to access that material in a convenient manner. Therefore, the "purpose and character" of the infringing use—one of the four fair use factors listed in 17 U.S.C. §107—weighed in favor of TVEyes. In Google Books, the court had held that Google’s copying of books served a transformative purpose because it created a text-searchable database that communicated something new and different from the original books. The court explained that the result of a word search was different in purpose, character, expression, meaning, and message from the book from which it was drawn. In addition, the display of an unaltered "snippet" of copyrighted text added important value to the transformative search function. TVEyes’s copying of Fox’s content for use in its service’s "Watch" feature was similarly transformative, the Second Circuit said. It enabled nearly instant access to material that would otherwise be irretrievable, or else retrievable only through prohibitively inconvenient or inefficient means. Enhancing efficiency for customers was a transformative purpose.
However, the commercial nature of TVEyes’ copying reduced the extent to which this Section 107 factor favored TVEyes. Ordinarily, the commercial nature of a secondary use strongly weighed against a fair use finding. Moreover, the court said, the transformative character of TVEyes service was only "modest" because, notwithstanding the transformative manner in which content was delivered, the service essentially republished Fox’s content unaltered from its original form. Accordingly, the first fair use factor only slightly favored TVEyes.
Amount and substantiality of portion used. After briefly stating that the second fair use factor—the nature of the copyrighted work—was not relevant, the court discussed the third factor—the amount and substantiality of the portion used in relation to the copyrighted work as a whole. The court noted that, pursuant to the holding Google Books, the relevant consideration was the amount of copyrighted material made available to the public rather than the amount of material used by the copier. This factor, in the court’s view, clearly favored Fox because TVEyes made available virtually the entirety of Fox programming that TVEyes’ customers wanted to view. In this respect, TVEyes’ "Watch" function was "radically dissimilar" from the service in Google Books. In that case, Google displayed only a "snippet" of text—three lines, or approximately one-eighth of a page—and users could view only up to three snippets for any searched term, and no more than one per page. Google prevented users from conducting repeated searches to gather multiple snippets that could be compiled into a coherent block of text. Additionally, about 22% of a book’s content was "blacklisted," so that no snippet could be shown from those pages. Snippets were not available at all from certain types of books, such as dictionaries and cookbooks, where a snippet might convey all the information a user needed. In contrast, TVEyes redistributed Fox’s news programming in 10-minute clips, which likely provided customers with all the Fox programming that they sought and the entirety of the message conveyed originally by Fox to authorized viewers. Therefore, this factor weighed against TVEyes.
Market effects. The final factor considered was the effect of TVEyes’ use on the potential market for Fox’s copyrighted content. Fox argued that TVEyes undercut Fox’s ability to profit from licensing searchable access to its copyrighted content to third parties. The court agreed with Fox, reasoning that the success of the TVEyes business model demonstrated that consumers were willing to pay a considerable fee for a service that allowed them to search for and view selected television clips, and that this market was worth millions of dollars in the aggregate. There was, the court said, a plausibly exploitable market for this type of access, and TVEyes displaced potential Fox revenues. This factor therefore weighed in Fox’s favor.
Balancing the factors. The Second Circuit concluded that TVEyes’ service was not justifiable as a fair use. Although it was at least somewhat transformative in that it rendered convenient and efficient access to a subset of content, the Watch function did little to change the content itself or the purpose for which the content was used. In addition, the service at issue was commercial. The Watch function allowed customers to see and hear virtually all of the Fox programming that they wished. Finally, TVEyes had usurped a function for which Fox was entitled to demand compensation under a licensing agreement.
"At bottom, TVEyes is unlawfully profiting off the work of others by commercially re-distributing all of that work that a viewer wishes to use, without payment or license," the court said. "Having weighed the required factors, we conclude that the balance strongly favors Fox and defeats the defense of fair use."
The appellate court remanded the case with instructions for the district court to modify its injunction in accordance with this decision.
Concurring opinion. District Judge Lewis A. Kaplan, sitting by designation, wrote separately, concurring in the result and parts of the majority opinion, but explaining that he disagreed with the majority’s characterization of TVEyes’ service as "somewhat transformative." According to Judge Kaplan, calling the service "somewhat transformative" was dicta because it did not affect the conclusion on fair use. Furthermore, Judge Kaplan expressed doubt that the service was transformative at all. Although he expressed reluctance to state a definitive opinion on the matter, Judge Kaplan said he was disinclined to conclude that simply providing a technological means that delivered copies of copyrighted material to a secondary user more quickly, efficiently or conveniently—while doing nothing to alter the material—rendered the distribution of the copies transformative.
The case is Nos. 15-3885(L) and 15-3886(XAP).
Attorneys: Dale Cendali (Kirkland & Ellis LLP) for Fox News Network, LLC. Kathleen M. Sullivan (Quinn Emanuel Urquhart & Sullivan, LLP) for TVEyes, Inc.
Companies: Fox News Network, LLC; TVEyes, Inc.
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