** LEGAL UPDATE **
Traditional media companies are not always particularly nimble. Meanwhile, startup companies often try to repurpose existing media content in new and different ways. Not shockingly, these realities often come into conflict.
In Fox News Network, LLC v. TVEyes, Inc., No. 15-3885 (2d Cir. 2018), a startup media company recorded programming from Fox News and made that programming searchable by keyword for paying users. Fox sued for copyright infringement, claiming that the scheme was little more than theft of its intellectual property. The U.S. Court of Appeals for the Second Circuit sided with Fox, offering a warning to companies aiming to ‘repurpose’ copyrighted media.
TVEyes is a media company that records the audiovisual content of some 1,400 television and radio stations. It then imports that content into a central database and catalogues shorter audio and visual clips. For a subscription, users can buy access to TVEyes’ database to search and download that recorded content.
The TVEyes database would track the closed captioning on all programs and allow users to perform searches by date, time, or keyword. The service was marketed to those in the news, media, entertainment, politics, and marketing industries.
Fox News Network, of course, is a major broadcast station of news and opinion content. In July 2013, it sued TVEyes for copyright infringement in the U.S. District Court for the Southern District of New York, arguing that the company was effectively profiting from copyrighted programming without permission. After all, it argued, TVEyes business model directly competed with its ability to license its own programming.
In the trial court, TVEyes argued that its practices were protected by the doctrine of fair use. More specifically, it argued that the fact that it allows the “vast corpus of Fox’s content” to become searchable and responsive to users’ interests renders their service fundamentally transformative, and thus protected.
The trial court agreed that the ability of users to download clips constituted infringement, but it believed that certain features, such as the ability to watch content online responsive to the user’s search, was acceptable under a fair use analysis.
But the U.S. Court of Appeals for the Second Circuit disagreed, finding that not even that aspect of the TVEyes service constituted fair use.
As Judge Dennis Jacobs wrote for the majority, “The principal question on appeal is whether TVEyes’s enabling of its clients to watch Fox’s programming is protected by the doctrine of fair use.” The Second Circuit ultimately rejected the defendant’s fair use arguments.
Under the doctrine of fair use, certain uses of copyrighted materials are deemed acceptable even without the copyright owner’s permission under certain circumstances.
These circumstances are narrow, and generally defined by 17 U.S. Code § 107. That statute allows a court to consider four factors when determining whether a particular instance of infringement qualifies under the fair use exception:
Using these factors, courts generally find that commentary, criticism, parody, and journalism, for example, qualify as fair use exceptions to conduct that would otherwise qualify as infringing.
Here, the Second Circuit evaluated each of the fair use factors, and found that almost all of them favored Fox.
Perhaps most persuasive for the Court were the third and fourth factors. TVEyes’ service allowed its users to view or download essentially all of Fox’s copyrighted content. And, following the logic of the fourth factor, TVEyes directly profited from these uses: “The success of the TVEyes business model demonstrates that deep‐pocketed consumers are willing to pay well for a service that allows them to search for and view selected television clips, and that this market is worth millions of dollars in the aggregate. Consequently, there is a plausibly exploitable market for such access to televised content, and it is proper to consider whether TVEyes displaces potential Fox revenues when TVEyes allows its clients to watch Fox’s copyrighted content without Fox’s permission.”
The Court reasoned that, by selling access to Fox’s audiovisual content without a license, TVEyes essentially deprived Fox of revenues to which it would have normally been entitled as the copyright holder.
The Second Circuit’s decision serves as a reminder that fair use is not a silver bullet for all allegations of copyright infringement. This is particularly true where, as here, the infringing use of the copyrighted material yields profit for the infringer.
Effective Date: February 27, 2018