On February 27 2018 the US Court of Appeals for the Second Circuit in Fox News Network, LLC, v TVEyes, Inc (15-3885) held that certain aspects of TVEyes's service – which allows users to watch video clips of programmes on Fox News and other channels – are not protected by the copyright fair-use doctrine under 17 USC Section 107.

Facts

TVEyes is a service which records television broadcasts from several channels 24 hours a day, creates a text-searchable transcript of those broadcasts and consolidates the broadcasts and transcripts into a text-searchable database. Users that pay for TVEyes's service can search the database for terms and watch related video clips, which can be up to 10 minutes long. The service also allows users to download videos, email the clips to others and search for videos by date, time and channel (rather than keyword).

The District Court for the Southern District of New York held that some aspects of TVEyes's service constituted fair use, namely enabling clients to search for videos, watch those videos and archive them on TVEyes's servers. However, it held that other aspects did not constitute fair use, for example enabling clients to:

  • download videos;
  • email videos to others; and
  • watch videos after searching for them by date, time and channel.

The district court enjoined or restricted those aspects of TVEyes's service. Fox appealed the district court's decision that the watch function of TVEyes's service constituted fair use, but did not challenge its decision that the search function was fair use.

In a decision by Judge Dennis G Jacobs, the Second Circuit addressed each of the four statutory fair-use factors set forth in 17 USC Section 107 to reverse the district court's determination that TVEyes's watch function constituted fair use.

Purpose and character of use

The first factor – the purpose and character of the use – focuses on whether the use in question is 'transformative' (ie, whether the use "communicates something new and different from the original or otherwise expands its utility"). The court relied on Authors Guild v Google Inc (804 F3d 202, 214 (2nd Cir 2015)) (Google Books) and Sony Corporation of America v Universal City Studios, Inc (464 US 417 (1984)) to hold that the watch function is "at least somewhat transformative". In Google Books, Google pooled digital copies of books into a text-searchable database which produces a list of books relevant to the searched-for term and provides three-line snippets containing the term. The Second Circuit found Google's copying to be fair use, noting that the snippet of copyrighted text "add[ed] important value to the basic transformative search function" because users could verify that the list of books was relevant to their search (804 F3d at 217). In view of Google Books, the court in TVEyes reasoned that the watch function was similarly transformative, as it "enables users to isolate, from an ocean of programming, material that is responsive to their interests and needs, and to access that material with targeted precision".

In Sony, the Supreme Court determined that recording a programme to watch at a more convenient time was not necessarily copyright infringement. In view of Sony, the court in TVEyes reasoned that the watch function similarly "achieves the transformative purpose of enhancing efficiency" by allowing TVEyes's clients to watch programmes when convenient. However, the court noted that, due to the commercial nature of TVEyes's use and the fact that the watch function "essentially republishes content unaltered from its original form", the watch function "has only a modest transformative character" and therefore favoured TVEyes only slightly.

Nature of copyrighted work

Regarding the second fair-use factor – the nature of the copyrighted work – the court, citing Google Books, noted that the nature of the copyrighted work rarely plays a significant role in fair-use analysis and "play[ed] no significant role here". The court rejected TVEyes's argument that, because facts are not copyrightable, "the factual nature of Fox's content militates in favor of a finding of fair use".

Amount and substantiality of portion used

Regarding the third fair-use factor – the amount and substantiality of the portion used relative to the copyrighted work as a whole – the court explained that the focus is on the amount of material "made available to the public", rather than the amount used by the copier. The court found that the third factor favoured Fox, as TVEyes made available "virtually the entirety of the Fox programming that TVEyes users want to see and hear". Although TVEyes's clips are only up to 10 minutes long, the court noted that 10 minutes constituted extensive copying "given the length of the average news segment on a particular topic". The court distinguished these facts from those in Google Books, noting that Google had imposed technological limitations on its snippets to prevent their compilation into a coherent block of text, such that it "would be nearly impossible for a user to see a meaningful exposition of what the author intended to convey to readers".

Effect of use Regarding the fourth fair-use factor – the effect of the use on the potential market for or value of the copyrighted work – the court agreed with Fox that TVEyes "undercut Fox's ability to profit for licensing searchable access to its copyrighted content from third parties". The court explained that the success of TVEyes's business model showed that consumers are willing to pay for a service that allows them to search for and view television clips and that, by providing Fox's content to viewers without payment to Fox, TVEyes had deprived Fox of licensing revenues.

Decision

The Second Circuit rejected TVEyes's fair-use defence regarding the watch function, holding that, although the first fair-use factor favoured TVEyes, it was outweighed by the third and fourth factors which strongly favoured Fox. Accordingly, the Second Circuit remanded to the district court to revise the injunction regarding the watch function, but noted that the injunction "shall not bar TVEyes from offering a product that includes [the Search function] without making impermissible use of any protected audiovisual content".

Senior Judge Lewis A Kaplan of the District Court for the Southern District of New York issued a separate opinion concurring in part with the majority's decision, but criticising as dicta the majority's holding that the watch function was "somewhat transformative". Kaplan argued that there was no need for the majority to address the transformative nature of the watch function in this case and that the majority's opinion "may contribute to confusion and uncertainty regarding this central concept in the law of fair use". Kaplan further noted that he was inclined "to conclude that a technological means that delivers copies of copyrighted material to a secondary user more quickly, efficiently or conveniently does not render the distribution of those copies transformative, at least standing alone".

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

For further information on this topic please contact Christopher Loh, Paul W Kalish or Kyle D Coogan at Fitzpatrick, Cella, Harper & Scinto by telephone (+1 212 218 2100) or email (cloh@fchs.com, pkalish@fchs.com or kcoogan@fchs.com). The Fitzpatrick, Cella, Harper & Scinto website can be accessed at www.fitzpatrickcella.com.