No News is Good News, for Fox: Transformative Technology Does Not Always Equal Transformative Fair Use
Under the copyright statute, potential infringers latch onto the “fair use” exception, especially with respect to new technology products, because of their transformative nature – with the influx and intelligence of today’s technology, how can an innovative piece of technology not win on the transformative prong? The Second Circuit recently analyzed how an innovative technology by TVEyes can still run afoul of Fox News’ copyright, and more importantly, provided an insight into just what “transformative” in this space means.
Imagine you just launched a product and you want to see how many times it has been reported on in the news and what the general response has been. Without hiring an entire team to sift through every news story launched, that task is daunting and nearly impossible. Recognizing a need, TVEyes created a program that collected and recorded news reports from over 1,400 channels throughout the entire day.[1] With those recordings, it used a mix of closed captioning and voice-to-text software to create a database where members of its service can type in a word or phrase and identify every news clip referencing a search term or phrase.[2] Accessible only to those in the news, entertainment, or public relations industry, TVEyes provides 10-minute clips from each news source that comes back as a match with the searcher’s terms.[3]
Fox News sued TVEyes in 2013, alleging that TVEyes was infringing its copyright by offering its subscription service to members for $500 a month, where they can (1) search for news clips using words or phrases, (2) view 10-minute long segments referencing the searched words, and (3) download and share the clips.[4] Not surprisingly, TVEyes argued that their service was fair use.[5]
Fair use is an affirmative defense to copyright infringement, and the Copyright Act specifies four non-exclusive factors that bear on fair use: (1) the purpose and character of the use, including whether such use is “transformative”; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.[6] Transformation, in this sense, has a particular meaning; “a work is transformative if it is ‘productive’ and if it adds ‘new insights and understandings’ for the ‘enrichment of society.’”[7] Under copyright, as stated earlier, the “fair use” exception is one that most potential infringers latch onto, especially in the technology realm, because of its transformative prong.[8]
Fox argued that TVEyes’ subscription was essentially a market substitution for its clips and any future Fox wished to make in selling its clips was being thwarted by TVEyes.[9] TVEyes argued that its service was transformative, in that it allowed members to “analyze companies’ approach to the news,” and noted that much like Google Books, whose service of providing small snippets of books was found to be fair use, TVEyes only allows members to view portions of the news.[10]
U.S. District Court Judge Alvin Hellerstein ruled that only part of TVEyes’ use of Fox’s material was infringing, and both parties appealed.[11] In reviewing the four prongs of fair use, the Second Circuit ruled that TVEyes’ service was somewhat transformative, but not protected by fair use because it harms Fox’s ability to market its own news segments, the most important prong in the fair use analysis.[12] In other words, TVEyes’ service costs Fox potential profits that could be earned if Fox wanted to sell its own news segments.[13] Even more interestingly, in a concurring opinion, Circuit Judge Kaplan made a critical distinction that the majority opinion had not – transformativeness relates to the use of the technology, not the technology itself.
Kaplan points to the majority opinion’s use of “somewhat” transformative, and states that “courts appear to label a use ‘not transformative’ as a shorthand for ‘not fair,’ and correlatively ‘transformative’ for ‘fair’” and that “[s]uch a strategy empties the term of meaning.”[14] Moreover, the concurrence argued that the majority opinion “may contribute to confusion and uncertainty regarding this central concept in the law of fair use.”[15] Kaplan also clarifies that the majority analyzed TVEyes’ watch function, rather than its search function, as somewhat transformative because it “improve[s] the efficiency of delivering content.”[16] Judge Kaplan explains that it cannot be the idea of enhancing efficiency that makes a function or technology transformative, and points to several prior cases where courts have refused to find transformative purpose on that premise alone.[17] Contrasting Google Books, Kaplan notes that the court acknowledged it was Google’s search function that was held to be transformative, not the reading of snippets.[18] Additionally, he notes, “Google designed the snippet feature ‘in a manner that substantially protects against its serving as an effectively competing substitute for Plaintiffs’ books,’ employing safeguards such as “blacklisting” (making permanently unavailable for snippet view one snippet per page and one complete page out of every ten) and showing no snippets at all from the sorts of books for which a short snippet would represent all the content a searcher wanted to see (such as dictionaries and cookbooks).”[19]
Technology has made our lives easier and our work more efficient, but just because technology helps complete a task more efficiently does not make it fair under copyright law. If in a fair use analysis, we are to review the technology itself with respect to transformativeness and not purpose or function, then courts will find this prong satisfied more often than not. Hopefully this ruling, along with the clarity provided by Judge Kaplan’s concurrence, helps to set a more consistent and understanding meaning of the term transformative in our copyright’s fair use analysis.
Footnotes
