On March 21, 2013, the U.S. District Court for the Southern District of New York issued a sweeping decision in favor of DWT’s client, The Associated Press, in its copyright infringement suit against Meltwater News, an online media monitoring service. For years, Meltwater and other companies have maintained that content published and freely available on the Internet can be scraped, compiled, and commercially re-sold under the guise of fair use. This decision seriously undermines that proposition and recognizes that Meltwater cannot “free ride on the costly news gathering and coverage work performed by other organizations.”

AP filed suit against Meltwater in February 2012, accusing it of copyright infringement and related claims. Meltwater is a commercial media-monitoring service that provides its paying customers with daily “News Reports” containing excerpts—include the headline and lede—from news articles scraped from the Internet on topics selected by the customer. After a period of expedited discovery, the parties submitted summary judgment motions on Meltwater’s liability for copyright infringement. Meltwater argued that it operated as an Internet search engine, and that its use of AP content was therefore protected by the fair use doctrine. Today’s opinion resoundingly rejected that argument.

One of the significant legal questions presented by this case was whether Meltwater’s use of news content placed it in a line of precedents about traditional clipping services—which have not been treated by courts as a fair use—or whether it was more fairly considered a “search engine” akin to uses approved by the Ninth Circuit in Perfect 10 v. Amazon and Kelly v. Arriba. In her 91-page opinion, U.S. District Judge Denise L. Cote carefully examined the nature of Meltwater’s use of news content in its Meltwater News service and found Meltwater to be “a classic news clipping service,” whose use of content was neither transformative nor fair. As the Court noted, “Meltwater copies AP content in order to make money directly from the undiluted use of the copyrighted material; this is the central feature of its business model and not an incidental consequence of the use to which it puts the copyrighted material.” Furthermore, the Court found that Meltwater’s use harmed the market for AP’s content: “By refusing to pay a licensing fee to AP, Meltwater not only deprives AP of a licensing fee in an established market for AP’s work, but also cheapens the value of AP’s work by competing with companies that do pay a licensing fee to use AP content in the way that Meltwater does.”

The Court also repeatedly rejected Meltwater’s argument that its use of search technology renders its use transformative, asserting that “[e]xploitation of search engine technology to gather content does not answer the question of whether the business itself functions as a search engine.” As the Court explained, “Using the mechanics of search engines to scrape material from the Internet and provide it to consumers in response to their search requests does not immunize a defendant from the standards of conduct imposed by law through the Copyright Act, including the statutory embodiment of the fair use defense.”

The Court also rejected Meltwater’s additional defenses to copyright infringement based on implied license, estoppel, laches, and copyright misuse. In support of its implied license defense, Meltwater had argued that by not employing robots.txt protocols to affirmatively block Meltwater—and requiring that its members and licensees do the same—AP had granted Meltwater an implied license to scrape and re-sell AP content published on the Internet, regardless of any copyright notices or terms of use explicitly limiting commercial use of AP content. The Court rejected this argument, noting that it would impermissibly shift the burden to copyright holders to affirmatively police the use of their content, rather than requiring infringing parties to show that content was properly used.

The case generated substantial interest from amici, who recognized the potential impact of this decision on the media industry. A consortium of news organizations—including The New York Times, The Washington Post, and Gannett—filed an amicus brief in support of AP, while the Electronic Frontier Foundation and Public Knowledge submitted a brief in support of Meltwater. The Computer & Communications Industry Association submitted an amicus brief, purportedly in support of neither party, asking the Court to take into account the effect of its ruling on the operation of “legitimate online services.” In its decision, the Court acknowledged the important public interest issues at stake. Noting a “strong public interest” in preserving efficient access to information that was complementary to—not in tension with—the important public interest in news reporting, the Court found that Meltwater’s unlicensed commercial use of AP content did not fit within this paradigm. At the same time, the Court recognized the impact of unlicensed commercial use on the ability of news organizations like AP to continue their important societal role of informing the public: “Investigating and writing about newsworthy events occurring around the globe is an expensive undertaking and enforcement of the copyright laws permits AP to earn the revenue that underwrites that work. Permitting Meltwater to take the fruit of AP’s labor for its own profit, without compensating AP, injures AP’s ability to perform this essential function of democracy.”