Court: District Court, S.D. New York; September 9, 2014; Federal District Court
TVEyes, Inc. operates a media-monitoring service that records and indexes content from over 1,400 television and radio stations continuously. It allows subscribers to search for specific keywords or phrases, offering transcripts and video clips of relevant broadcasts. Fox News Network, LLC filed a lawsuit against TVEyes, seeking to prevent the copying and distribution of its program clips, citing violations of the Copyright Act and New York laws on unfair competition and misappropriation. TVEyes claims fair use as a defense. The court ruled that TVEyes' use constitutes fair use, but noted there are specific factual questions that could affect this determination. Consequently, Fox News' request for an injunction was denied. TVEyes' service is essential for entities like the U.S. Army and local police departments, enabling them to track comprehensive media coverage efficiently, which would otherwise require manual monitoring of numerous broadcasts. Subscribers can create a customized “Watch List” to monitor keyword usage over specified periods, facilitating a detailed comparison of media mentions across different platforms.
Subscribers can set up email alerts for specific keywords, receiving notifications one to five minutes after the terms are mentioned across 1,400 monitored television and radio stations. Notifications include a thumbnail image of the show, a transcript snippet, and a short video clip starting 14 seconds before the keyword is mentioned. Clicking on the mention hyperlink directs users to a Results List Page showing mentions in reverse chronological order, with highlighted transcripts and show thumbnails.
From the Transcript Page, users access detailed information including program title, date and time, transcript, channel details, Nielsen Ratings viewership, publicity value from SQAD, and any available web links for the channel or program. TVEyes also offers graphical data organization through the Media Stats page, displaying mention frequency over time, geographical usage via a market share heat map, and a pie chart for broadcast station breakdowns.
A Power Search tool allows for ad-hoc keyword searches and time-specific video playback. Subscribers can save, archive, edit, and download clips (limited to ten minutes, with most under two minutes) to personal computers. Clips can be emailed to any recipient, directing them to TVEyes’ website for high-definition viewing. Clips remain available for 32 days unless saved or downloaded. TVEyes is designed for businesses, not the general public, and had over 2,200 subscribers as of October 2013, including notable organizations such as the White House, Congress members, and major media outlets.
TVEyes subscribers must agree to a User Agreement that restricts the use of downloaded clips strictly for internal purposes, prohibiting reproduction, publication, rebroadcasting, or public display. Notifications on the website and in email communications reinforce these limitations. When users inquire about rights for public posting or dissemination of clips, TVEyes directs them to the broadcasters. A new feature prevents users from playing more than 25 minutes of continuous content from a single station. TVEyes is a for-profit entity with over $8 million in revenue in 2013, charging subscribers $500 monthly, significantly higher than cable television costs. Its marketing emphasizes capabilities like live TV viewing, unlimited clip downloads, emailing, social media posting, and unlimited storage, positioning itself as superior to traditional clipping services. The Media Snapshot feature allows users to watch live-streams of recorded content, which Fox News has highlighted in its copyright infringement claims.
Fox News, based in New York, operates two channels: Fox News Channel (FNC) and Fox Business Network (FBN), both providing 24/7 news coverage. FNC has been the most-watched news channel in the U.S. for over a decade, while FBN focuses on financial news, reaching over 70 million subscribers. Fox News incurs substantial costs in news coverage, reflecting significant creative effort. The channels feature a news ticker for real-time updates and have a growing online presence, offering clips shortly after airing. However, Fox News is concerned that extensive online dissemination could undermine its television viewership. Approximately 16% of its content is available online, with clips differing from original broadcasts by omitting elements like the news ticker.
Online clips from Fox News sometimes include "corrected" versions of original news stories, which fix inaccuracies found in the television broadcasts. Website visitors encounter an advertisement before accessing these clips, generating revenue for Fox News. Users can share specific clip URLs on social media and search video content using keywords. However, the clips are restricted to personal use only, prohibited from commercial use, and downloading is not allowed. Fox News licenses third-party websites like Yahoo, Hulu, and YouTube to display its clips, earning approximately $1 million from these licensing fees over the past three years. Licensees must agree not to present the clips in a derogatory manner. The exclusive licensing agent, ITN Source, manages a library of over 80,000 Fox News clips, earning around $2 million in licensing fees, and markets to various organizations, including corporations and government entities.
Fox News primarily generates revenue from fees paid by cable companies for broadcasting its content, in contrast to free broadcast television. Cable providers, such as Time Warner Cable, pay per-subscriber carriage fees, which increase with subscriber numbers. Revenue from advertising is directly linked to viewer ratings and website traffic. Fox News filed a lawsuit against TVEyes for allegedly diverting viewers and infringing copyright by allowing subscribers to play, save, and share Fox News video content. The lawsuit cites copyright infringement of 19 specific hour-long programs aired between October 16, 2012, and July 3, 2013, for which Fox News holds copyright registrations. TVEyes claims its actions fall under the "fair use" doctrine of the Copyright Act. Both parties have filed motions for summary judgment, with the court required to rule in favor of the opposing party if there are any ambiguities or factual disputes.
The fair use affirmative defense can be determined at summary judgment if there are no disputed material facts. The Copyright Act grants authors a limited monopoly over their original works, including the exclusive rights to reproduce and create derivative works. To establish copyright infringement, an author must demonstrate ownership of a valid copyright and unauthorized copying of the work. In the case at hand, Fox News owns valid copyrights for the nineteen television programs involved, and TVEyes admits to verbatim copying of these works, which constitutes infringement unless TVEyes can prove fair use.
Fair use, as defined by the Supreme Court, allows certain uses of copyrighted materials without the author's permission, essential for promoting the progress of science and useful arts. The fair use doctrine is outlined in 17 U.S.C. 107, providing a presumption in favor of fair use for specific purposes such as criticism, comment, news reporting, teaching, scholarship, or research.
To evaluate fair use, courts must consider four nonexclusive factors: (1) the purpose and character of the use, (2) the nature of the copyrighted work, (3) the amount and substantiality of the portion used, and (4) the effect on the market for the original work. These factors must be assessed collectively, with the ultimate goal being whether allowing the use promotes the objectives of copyright law. The determination of fair use is a case-by-case analysis, and the burden of proof lies with the proponent of the fair use defense, who does not need to show that all factors favor their position.
The first factor in fair use analysis considers the purpose and character of the use, specifically whether it is commercial or nonprofit educational. Courts evaluate if the new work merely replaces the original or adds new expression or meaning, assessing its transformative nature. A work is considered transformative if it serves a different function from the original and is not a mere substitute. Transformation is central to fair use, as more transformative uses diminish the relevance of commercialism in the analysis.
TVEyes argues for transformative use based on precedents involving electronic libraries, such as the Hathi Trust Digital Library (HDL), which allows users to search for terms across a vast collection of books without displaying text snippets, thereby qualifying as fair use due to its transformative purpose. In contrast, Google’s digital library, which scans over 20 million books and provides a snippet view of search results, also claims fair use. However, Google’s method limits user access to full text and complicates the ability to read entire works, with certain pages blocked from view, further illustrating the complexities of determining transformative use in digital contexts.
The Authors Guild initiated a copyright infringement lawsuit against Google, which defended itself by claiming fair use, arguing that its Google Books project was transformative. The district court supported Google's stance, finding that its digitization of books created a “highly transformative” database that serves as a comprehensive word index, facilitating access for readers, scholars, and researchers. The court highlighted that Google Books changes how book text is utilized, transforming it into data for research purposes such as data mining and text mining, thus providing new insights into word frequency and usage trends.
The court noted that Google Books does not replace physical books but enhances their value by generating new information. It considered the impracticality of users attempting to compile extensive snippets to replicate an entire book, suggesting that users would likely need the physical copy for effective searches. The court referenced relevant case law, including Perfect 10 v. Amazon.com and Kelly v. Arriba Soft Corporation, which supported the notion of transformative use in different contexts.
In contrast, the court differentiated Google Books from other cases, such as Fox News v. TVEyes, where the latter's replication of content was deemed non-transformative. Other cited cases, including Infinity Broadcast Corp. v. Kirkwood and Associated Press v. Meltwater, underscored that services merely repackaging or redistributing original content without adding transformative elements typically do not qualify for fair use. The district court ultimately recognized the transformative purpose of search engines, which help users navigate vast amounts of data online.
Meltwater did not provide evidence demonstrating that its service helped customers access the underlying news stories in its news feed, which weakened its fair use defense. The court referenced prior cases to illustrate that mere copying of a work for the same purpose as the original constitutes copyright infringement, contrasting those with TVEyes, which offers a transformative service. Unlike Meltwater, which aggregated existing online content, TVEyes indexes and collects visual and audio media from television broadcasts, providing unique access to the presentations themselves, including the nuances of delivery that are crucial for conveying news context. This transformative nature of TVEyes’ service distinguishes it from traditional clipping or indexing services, enabling subscribers to gain insights beyond what written summaries offer. Additionally, TVEyes creates a comprehensive database of broadcast content that is not fully available online, highlighting its unique contribution to news accessibility.
TVEyes’ service is characterized as transformative, enabling users to gather and search information that would otherwise be inaccessible without significant effort. This distinction from Meltwater, which merely compiled existing content, diminishes the relevance of the Meltwater case. Fox News contends that TVEyes’ clips infringe on its copyright; however, these excerpts are essential for TVEyes' function of monitoring news and opinions across media, providing context through tone, body language, and facial expressions. Fox News argues that users could watch content in brief segments, but the practicality of such actions is questionable.
The decision emphasizes the need for case-by-case analysis rather than rigid rules, affirming that TVEyes’ clips serve a distinct purpose, separate from the original works. Citing Second Circuit precedent, the analysis acknowledges that databases that transform copyrighted works into research tools are considered transformative. TVEyes provides a different message than Fox News, emphasizing research and criticism, which supports its fair use claim under 17 U.S.C. § 107.
Although TVEyes is a for-profit entity, the transformative nature of its service lessens the weight of commercialism in the fair use analysis. The first factor of the fair use test favors TVEyes. The second factor examines the nature of the copyrighted work, recognizing that while Fox News’ creative expression is protected, factual works offer more leeway for fair use determinations. The news itself lacks copyright, but the specific portrayal and expression by Fox News are protected, suggesting a nuanced approach to the fair use evaluation.
Fair use is more broadly applicable in certain cases, particularly when the creative work is transformed. The second factor regarding the nature of the copyrighted work does not significantly influence the fair use determination in this instance. The third factor examines the amount used relative to the whole copyrighted work; here, TVEyes copies all content from Fox News, which is central to its business model. However, the inquiry focuses on whether the amount copied exceeds what is necessary for the transformative purpose. Since the transformative function requires comprehensive copying to ensure reliability, this factor does not weigh against fair use.
The fourth factor assesses the impact of the use on the market for the copyrighted work, considering both direct harm and potential harm to derivative markets. Economic injury from transformative uses is not relevant, as these uses do not substitute for the original work. The analysis must weigh public benefits against potential losses for the copyright owner. Overall, the Fair Use doctrine prohibits excessive market harm caused by substitutive uses of the original work.
Market harm is evaluated based on degree and is influenced by the extent of harm relative to other factors. Fox News has filed a suit concerning 19 hour-long programs aired between October 2012 and July 2013, claiming that TVEyes’ service negatively impacts its carriage fees from advertisers and providers by diverting viewers away from Fox News channels. However, Fox News' assertions are largely speculative, lacking factual support. Key points include:
1. TVEyes deletes content every 32 days, meaning the specific programs in question are no longer available.
2. During the 32 days these programs were accessible, only 560 clips were played, averaging 53.4 seconds each, with 85.5% of clips played for less than one minute.
3. Historical data shows that only 5.6% of TVEyes users accessed Fox News content, with minimal engagement; only three instances involved viewing 30 minutes or more of sequential content.
4. The average clip play duration is 41 seconds, with less than 1% of users engaging with video clips resulting from keyword searches, and most clips are under three minutes long.
5. There is no evidence to support Fox News' claim that TVEyes users substitute their viewing of Fox News with the service.
Additionally, Fox News contends that TVEyes undermines the market for licensed video clips, questioning why subscribers would purchase clips from licensing agents when they are available through TVEyes. Overall, the record fails to substantiate Fox News' allegations of potential harm to its revenue or advertising rates from TVEyes' operations.
Fox News cannot identify the customers affected by the alleged loss from Executive Interviews. Between July 1, 2012, and June 30, 2013, Fox News generated $212,145 from syndication partners and $246,875 from clip licensing, which represents a minor portion of its total revenue. Given this negligible potential impact, any market harm to Fox News is likely outweighed by the public benefits provided by TVEyes.
TVEyes argues that its service significantly benefits the public by creating a searchable library of television content that would otherwise be inaccessible. This service allows users to efficiently sift through over 27,000 hours of daily programming, facilitating commentary, criticism, and fact-checking of media reports. Various entities, including government bodies, political campaigns, financial firms, and the military, utilize TVEyes for monitoring and compliance purposes.
The conclusion indicates that the public benefits provided by TVEyes outweigh any minor competitive harm to Fox News, particularly when considering the de minimis nature of the possible market impact. Ultimately, the evaluation of the statutory factors highlights that TVEyes operates under a different purpose than Fox News, focusing on archival and evaluative functions rather than competing directly with Fox News for viewership. Monitoring television content serves distinct objectives from simply viewing it, further supporting a finding of fair use.
In Ltd. v. Bloomberg LP, the court examined the fair use doctrine in relation to TVEyes' copying of Fox News' broadcast content for indexing and clipping services. It concluded that such copying may qualify as fair use due to its transformative purpose and public benefit, although it did not fully resolve the fair use issue concerning the full range of TVEyes' services, including features that allow users to save, archive, and share clips. The court noted insufficient evidence to determine whether these features are integral to TVEyes' transformative purpose or pose a threat to Fox News’ business.
Additionally, Fox News' hot news misappropriation claim was analyzed. To succeed, Fox News must demonstrate that it incurs expenses in generating information, that the information is time-sensitive, that TVEyes’ use constitutes free-riding, that TVEyes competes directly with Fox News, and that allowing such free-riding would threaten Fox News' incentive to produce quality news. The court indicated a need to first assess whether this state law claim is preempted by the federal Copyright Act, which governs exclusive rights related to copyright protections.
State law hot news misappropriation claims are preempted by the Copyright Act when the claim seeks to enforce rights equivalent to those protected by the Act and involves works covered by it. In such cases, the court employs the “extra element test” to assess if the claim has an additional element that distinguishes it from a copyright claim. Fox News contends that the “extra element” is TVEyes' alleged theft of its hot news, paralleling the free-riding situation in INS v. AP. However, the Supreme Court's definition of free-riding involves appropriating and selling another's work as one's own, which does not apply here since TVEyes does not pass off Fox News' content as its own. Referring to Barclays Capital, the Second Circuit ruled that hot news misappropriation claims are preempted when defendants merely collate and disseminate factual information without engaging in free-riding. Fox News' claim follows this precedent, as the value of TVEyes lies in its accurate attribution of information rather than its reputation as a news outlet, indicating that it does not infringe upon Fox News’ rights.
The hot news misappropriation claim brought by Fox News is preempted by the Copyright Act, as it fails the extra element test. The misappropriation claim is based on the principle that no one should unjustly enrich themselves at another's expense, requiring grounding in deception or appropriation of exclusive property. However, this claim is also preempted by the Copyright Act for similar reasons. Fox News argues that TVEyes acted in bad faith, suggesting this intent could serve as an extra element to avoid preemption; however, elements addressing a tortfeasor's intent do not qualify as "extra elements" that would exempt a claim from preemption. Prior cases have established that misappropriation claims solely based on the copying of protected expression are preempted by copyright law. The misappropriation doctrine is effectively equivalent to the exclusive rights granted by copyright, which includes remedies for wrongful copying, reinforcing the finding of preemption. The court concludes that TVEyes’ use of television clips and transcripts is transformative and qualifies as fair use, although further development of the record is needed to ascertain the protection of additional features like search and sharing capabilities. A status conference is scheduled for October 3, 2014, to discuss remaining issues, with a joint letter from counsel due by October 1, 2014. Confidentiality has been requested regarding substantial materials in the briefs.
Confidentiality is waived regarding information in this opinion, as public interest in understanding the fair use defense supersedes confidentiality concerns, citing Hartford Courant Co. v. Pellegrino. Stroock, Lavan, LLP, is mentioned as a subscriber and was previously associated with the author before their judicial appointment in 1998. The case involves 19 specific television program episodes, including various shows from Fox News. A derivative work is identified as one that is based on preexisting works, including translations and adaptations, with a legal definition provided under 17 U.S.C. 101. Fox News holds copyrights only for the creative expressions in its programs, while factual reports themselves are not copyrightable due to the non-original nature of facts. However, compilations and presentations of facts can be copyrighted if they display originality, as established in Nihon Keizai Shimbun, Inc. v. Comline Business Data, Inc. Hathi Trust is noted for allowing libraries to provide access to digital book content for patrons with certified print disabilities.
