Eyes on the fair use prize: TV news clip service is fair

Fox News Network, LLC v. TVEyes, Inc, No. 13 Civ. 5315 (S.D.N.Y. Sept. 9, 2014)
See if you can tell how this case will come out from reading a chunk of the first sentence: TVEyes “monitors and records all content broadcast by more than 1,400 television and radio stations twenty-four hours per day, seven days per week, and transforms the content into a searchable database for its subscribers.”  Subscribers use search terms to find out “when, where, and how those search terms have been used, and obtain transcripts and video clips of the portions of the television show that used the search term.  TVEyes serves a world that is as much interested in what the television commentators say, as in the news they report.”  Fox sued.
The court found that, with the exception of certain features, TVEyes was entitled to summary judgment on its fair use defense.  The court also declined to keep any material on which it relied confidential.  “The interest of the public in the full basis of the fair use defense outweighs any interest in confidentiality.”
TVEyes’ subscribers use the service to track news coverage of particular events.  TVEyes is available only to businesses (or similar entities), not to the public. Subscribers include the United States Army and Marines, the White House, “numerous members” of the United States Congress, the Department of Defense, the United States House Committee on the Budget, the Associated Press, MSNBC, Reuters, the American Red Cross, AARP, Bloomberg, Cantor Fitzgerald, Goldman Sachs, ABC Television Group, CBS Television Network, the Association of Trial Lawyers, the judge’s former law firm Stroock & Stroock & Lavan, and local and state police departments. 
What do they do with this service?  “[P]olice departments use TVEyes to track television coverage of public safety messages across different stations and locations, and to adjust outreach efforts accordingly.”  Without TVEyes, the only way the police departments could do that would be to have individuals watching every news program 24/7, taking notes.  “An Internet search of a recent amber alert for a missing child, for example, would not yield the same results as would a TVEyes search result, because using the internet search results would provide only the segments of content that the television networks made available to the Internet.”  TVEyes, by contrast, is reliable and authoritative.
Subscribers have Watch List Pages, which monitor the subscriber’s chosen keywords and terms and organize search results by day (for 32 days).  A user can also run a Google News search on the Watch List Page for comparison.  Subscribers can tabulate a term’s use in a customized time period and compare its relative frequency to other terms.  They can set up email alerts and be notified 1-5 minutes after the keyword or term is mentioned on any of the 1,400 television and radio stations TVEyes monitors.  Subscribers get “a thumbnail image of the show, a snippet of transcript, and a short video clip beginning 14 seconds before the word was used.” 
Subscribers who click on a link showing how many times a term was mentioned on a particular day get a Results List Page, which displays each mention of the keyword or term in reverse chronological order, with a portion of transcript highlighting the keyword and a thumbnail image of the particular show that used the term. Clicking the thumbnail makes the short video clip play alongside the transcript on the Transcript Page, beginning 14 seconds before the keyword is mentioned.  The Transcript page provides program title, day/time of the clip, a transcript, the name and location of the channel, Nielsen Ratings data for the clip, the publicity value of the clip according to data from a television research company, and an address for the website of the channel that features the program or for the program itself if it exists.
TVEyes also creates pages that present the data in different ways: The Media Stats page provides a graphic showing the number of times a term has been mentioned over a given time period.
The Marketshare page displays a “heatmap” graphic that shows the geographic locations where the term is most used, and the frequency of the mentions. The Broadcast Network page generates a pie chart depicting the breakdown of broadcast stations on which the watch term was used. TVEyes also features a Power Search tool that allows users to run ad-hoc keyword search queries; clicking the thumbnail image will bring the user to the clip’s corresponding transcript page. Subscribers also can organize searches according to dates and times, by broadcast. The “Date and Time Search” feature enables subscribers to play a video clip starting at a specific time and date on a specific television station, rather than entering a search term.
As for subscribers, they can save and download an unlimited number of clips.  But the clips can only be ten minutes, and most are under two minutes.  A subscriber can email a link to the clip from the TVEyes website to anyone, whether or not they’re a subscriber.  Of course, once the user has downloaded a clip, she can share it with anyone (a result the court rather puzzlingly describes as the ability to share the clip or a link to it “on any and all social media platforms and by email”); links also go to TVEyes’ website and allow recipients to watch the video in HD.  After 32 days, the clip disappears from TVEyes unless saved or downloaded by a user.
All subscribers must sign a contract limiting use of clips to internal purposes, and a notice reminding users of the limits appears with every download.  When people ask how to get rights to post clips publicly, TVEyes refers them to the broadcaster.  It recently added a feature to block users from trying to play more than 25 minutes of sequential content from a single station.
Subscribers pay $500/month, more than the cost of cable service, earning TVEyes more than $8 million in revenue in 2013.  Its marketing touts users’ ability to “watch live TV, 24/7;” “monitor Breaking News;” “download unlimited clips” of television programming in HD; play unlimited clips from television broadcasts, “email unlimited clips to unlimited recipients”; “post an unlimited number of clips” to social media; and enjoy “unlimited storage [of clips] on TVEyes servers,” which gives it advantages over “the traditional clipping services.”  TVEyes also advertises that subscribers can edit unlimited radio and television clips and download edited clips. It states that Media Snapshot feature “allows you to watch live-streams of everything we are recording. This is great for Crisis Communications, monitoring Breaking News, as well as for Press Conferences.”
Fox spends a lot on producing news.  It makes about 16% of its television broadcast content available online, “and is concerned that a broader dissemination beyond that will result in a weakening of its viewer-base or create a substitute for viewing Fox News on television cable and satellite.” Its online clips show up within an hour of airing, but they don’t show exactly what aired—the news ticker is absent, and sometimes the clips are “corrected” versions of stories rather than the aired version. 
Monetization: Fox shows pre-reel ads before clips on its sites to make money, and also lets visitors search its video clips by keywod and share links to video (by copying and pasting) on social media. Visitors can’t download clips.  Fox further licenses third party websites, including Yahoo!, Hulu, and YouTube, to host video clips, for about $1 million in the past three years. “Fox News licensees must covenant that they will not show the clips in a way that is derogatory or critical of Fox News.”  (Insert your own joke about that.)  In addition, Fox distributes clips through its clip licensing agent, ITN Source, which allows companies and governmental organizations to use over 80,000 Fox clips in many ways, including posting them on a website “or social media platform” or to create digital archives.  This has made Fox about $2 million in licensing fees.  ITN’s partner Executive Interviews markets copies of video clips to Fox guests. However, the vast majority of Fox News revenues comes from cable fees. 
Here, Fox didn’t dispute TVEyes’ use of its broadcasts to create an analytical database. Instead, it sued over TVEyes’ provision of subscribers with video clips.
The use was transformative.  “Transformation almost always occurs when the new work
does something more than repackage or republish the original copyrighted work.’”  Authors Guild, Inc. v. HathiTrust, 755 F.3d 87 (2d Cir. 2014).  And transformation can occur without physical alterations to the original. Swatch Group Mgmt. Servs. v. Bloomberg LP, 2014 WL 2219162 (2d Cir. May 30, 2014). 
Against HathiTrustand Authors Guild v. Google, Fox pointed to Nihon Keizai Shimbun, inc. v. Comline Business Data, Inc., 166 F.3d 65 (2d Cir. 1999) (ruling that abstracts and rough translations of Japanese copyrighted content were not transformative), Infinity Broadcast Corp. v. Kirkwood, 150 F.3d 104 (2d Cir. 1998) (allowing dial-in subscribers to listen to live radio over the phone wasn’t fair use), and Associated Press v. Meltwater US Holdings, Inc., 931 F. Supp. 2d 537 (S.D.N.Y. 2013) (news monitoring service that downloaded articles from the internet and allowed keyword searching was not transformative because it “uses its computer programs to automatically capture and republish designated segments of text from news articles, without adding any commentary or insight in its New Reports.”). 
Meltwater was the only case in which the defendants weren’t just “copying the plaintiff s work and then selling it for the very same purpose as plaintiff,” a quintessential infringement situation that shed little light on the present dispute.  Meltwateracknowledged that allowing users “to sift through the deluge of data available through the Internet and to direct them to the original source … would appear to be a transformative purpose.” But Meltwater didn’t offer “evidence that Meltwater News customers actually use[d] its service to improve their access to the underlying news stories that are excerpted in its news feed,” and thus failed to show that its service was actually used by subscribers for research or to transform the original news story into a datapoint that told a broader story about the overall news reporting industry.  
TVEyes was different, because video was different:  Print is “fixed in form” and readily available from publishing sources and archives.  A clipping service thus “provides essentially the same service as could be provided by the content provider itself.” But TVEyes’ search results provide a combination of visuals and text in a way that makes the commentary in the clips news itself.  “The focus of certain programs and talk shows on President Obama’s recent golf vacation, for example, was as much the news as the beheading of an American reporter.” In addition, the actual images and sounds “are as important as the news information itself –the tone of voice, arch of an eyebrow, or upturn of a lip can color the entire story, powerfully modifying the content.”  TVEyes’ indexing and collection of video allows subscribers to do more than categorize content—it allows them access to “information [that] may be just as valuable to [subscribers] as the [content], since a speaker’s demeanor, tone, and cadence can often elucidate his or her true beliefs far beyond what a stale transcript or summary can show” (Swatch).  So, “[u]nlike the indexing and excerpting of news articles, where the printed word conveys the same meaning no matter the forum or medium in which it is viewed, the service provided by TVEyes is transformative.”
And none of that was really necessary to the next step, since it’s also true of text: “By indexing and excerpting all content appearing in television, every hour of the day and every day of the week, month, and year, TVEyes provides a service that no content provider provides.” By its nature, TVEyes doesn’t report on the news. It gives subscribers access to how the news is reported.  Meltwater, by contrast, “aggregated content already available to the individual user who was willing to perform enough searches and cull enough results on the Internet.”  (So would the individual user infringe?  Unless the individual user’s purpose there is the same as the content provider’s, which seems implausible, the individual user also has a different purpose than the source, and that wouldn’t change when a third party helped.)  TVEyes was the only source for a database of everything that TV channels broadcast 24/7.  It wasn’t all on the internet.  TVEyes brought it together made it searchable.  “That, in and of itself, makes TVEyes’ purpose transformative  and different in kind from Meltwater’s, which simply amalgamated extant content that a dedicated researcher could piece together with enough time, effort, and Internet searches.”  (These attempts to distinguish Meltwater are strained, but then Meltwater didn’t have the benefit of HathiTrust.)
Plus, the clips were important to provide “the full spectrum of information identified by an index, for the excerpt discloses, not only what was said, but also how it was said, with subtext body language, tone of voice, and facial expression –all crucial aspects of the presentation of, and commentary on, the news.”  Fox contended that a TVEyes subscriber could watch sequential 10-minute clips end to end, seeing all of Fox’s programs 2-5 minutes after airing.  This was unrealistic, given the cost and trouble. 
Ultimately, TVEyes’ search engine and display of result clips was transformative, serving a new and different function from the original. TVEyes’ message, “‘this is what they said’ -is a very different message from [Fox News’] –‘this is what you should [know or] believe’” (Swatch).  TVEyes’ evidence that its subscribers used the service for “research, criticism, and comment,” was undisputed, and these purposes are favored explicitly in §107’s preamble, making them weigh in favor of fair use.
I’m going to rush past what you all know about the effect of TVEyes’ commerciality, the nature of the work (greater scope for fair use because the news is factual), and the amount taken (no more than necessary for the purpose, since its value and reliability depends on being all-inclusive), given the transformativeness finding.  The court still said the third factor didn’t weigh for either side, though it seems that means “helps TVEyes,” “since ‘the extent of permissible copying varies with the purpose and character of the use,’ and TVEyes’ service requires complete copying twenty-four hours a day, seven days a week.”
Market harm must come from substitution, not from transformative markets.  Fox argued that TVEyes’ service decreased the per-subscriber fees advertisers, cable providers, and satellite providers were willing to pay by allowing people to watch copies on TVEyes.  But that assumed substitution, and the facts contradicted this speculation.
While the 19 programs in suit were available, only 560 clips were played, with an average length of play of 53.4 seconds and a maximum of 362 seconds or just over 6 minutes. “85.5% of the clips that were played were played for less than one minute; 76% were played for less than 30 seconds; and 51% were played for less than 10 seconds.” One program wasn’t excerpted at all.  TVEyes’ general statistics were consistent with these specifics:
From 2003 to 2014, only 5.6% of all TVEyes users have ever seen any Fox News content on TVEyes. Between March 31, 2003 and December 31, 2013, in only three instances did a TVEyes subscriber access 30 minutes or more of any sequential content on FNC, and no TVEyes subscriber ever accessed any sequential content on FBN. Not one of the works in suit was ever accessed to watch clips sequentially.
Thus Fox failed to show that TVEyes caused, or was likely to cause, any adverse effect to Fox News’ revenues or income from advertisers or cable or satellite providers.  More generally, in a typical month, “fewer than 1% of TVEyes’ users play a video clip that resulted from a keyword search of its watch terms.”  They play clips on average for 41 seconds, with a median duration of 12 seconds.  “95% of all video clips played on TVEyes are three minutes or shorter; 91% are two minutes or shorter; and 82% are a minute or shorter. Fewer than .08% of clips are ever played for the maximum clip time of ten minutes.”  Moreover, most clips come from keyword search; “fewer than 5.5% of all plays originate from a Date and Time Search.”   “No reasonable juror could find that people are using TVEyes as a substitute for watching Fox News broadcasts on television. There is no history of any such use, and there is no realistic danger of any potential harm to the overall market of television watching from an ‘unrestricted and widespread conduct of the sort engaged in by defendant.’”
What about the derivative market for video clips with YouTube, ITN Source, etc.?  Fox couldn’t show any lost customers from Executive Interviews (the closest match).  And its entire revenue over one year was $212,145 from syndication partners and $246,875 from clip licensing, “a very small fraction of its overall revenue.”  Given this small possible impact, any cognizable harm was outweighed by the public benefit of TVEyes’ service.
Turning to that public benefit: “Without TVEyes, there is no other way to sift through more than 27,000 hours of programming broadcast on television daily, most of which is not available online or anywhere else, to track and discover information.”  Subscribers use the service to “comment on and criticize broadcast news channels”:
Government bodies use it to monitor the accuracy of facts reported by the media so they can make timely corrections when necessary. Political campaigns use it to monitor political advertising and appearances of candidates in election years.  Financial firms use it to track and archive public statements made by their employees for regulatory compliance.  The White House uses TVEyes to evaluate news stories and give feedback to the press corps.  The United States Army uses TVEyes to track media coverage of military operations in remote locations, to ensure national security and the safety of American troops.  Journalists use TVEyes to research, report on, compare, and criticize broadcast news coverage.  Elected officials use TVEyes to confirm the accuracy of information reported on the news and seek timely corrections of misinformation.
This provided substantial benefit to the public.  Subject to possible exceptions discussed below, “this factor does not weigh against a finding of fair use, especially when the de minimis nature of any possible competition is considered in comparison to the substantial public service TVEyes provides.”  
Weighing the factors, TVEyes’ service had an entirely different purpose and function than the original broadcasts. “TVEyes captures and indexes broadcasts that otherwise would be largely unavailable once they aired.”  (Preservation as transformative purpose!)  Users’ purposes were also different: “monitoring television is simply not the same as watching it.” 
However, TVEyes didn’t receive summary judgment on all parts of its service.  For the portion of the service that allowed subscribers to save, archive, download, email, and share clips of television programs, the parties didn’t provide sufficient evidence showing these features’ relationship to the transformative purpose of indexing and providing clips and snippets, or instead “threatening to Fox News’ derivative businesses.”  Nor were the parties entitled to summary judgment on “whether the date and time search function was integral to the transformative purpose of TVEyes.  “While the evidence shows that this feature does not pose any threat of market harm to Fox News, the record fails to show that it is crucial or integral to TVEyes’ transformative purpose.”  (Feature by feature fair use litigation has the potential to get pretty ugly.)
The court then dismissed Fox’s hot news misappropriation claim.  Is there any extra element here that would allow it to survive §301 preemption?  Fox argued that the extra element was the free riding, as in INS v. AP. But for these purposes, the term “free-riding” means “taking material that has been acquired by complainant as the result of organization and the expenditure of labor, skill, and money, and which is salable by complainant for money, and … appropriating it and selling it as the [defendant’s] own …” (Barclays Capital, Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876 (2d Cir. 2011)).
Barclays found a similar claim preempted.  There, the aggregator defendants weren’t free riding, but collating and disseminating information: plaintiff and others’ financial recommendations, which were news, and attributing the recommendations to their sources. “Similarly, TVEyes is not a valuable service because its subscribers credit it as a reliable news outlet, it is valuable because it reports what the news outlets and commentators are saying and therefore does not ‘scoop’ or free-ride on the news services.”  (Still have no idea what the extra element could be for hot news, but ok.)
A generalized state law misappropriation claim also failed. Such a claim must be “grounded in either deception or appropriation of the exclusive property of the plaintiff.” Thus, it was preempted by §301.  Fox argued that bad faith was an extra element, but it’s not, since bad faith alters the action’s scope but not its nature.

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