Fox News Network, LLC v. TVEyes, Inc.: Second Circuit Rejects Fair Use Defense for Mass Archiving and Re-Distribution of Copyrighted TV Content

A panel of the U.S. Court of Appeals for the Second Circuit today issued its much-anticipated opinion in the TVEyes appeal, reversing the decision of the U.S. District Court for the Southern District of New York, and holding that TVEyes’ copying, storage, and re-distribution for viewing, downloading, and sharing, of massive amounts of copyrighted TV content was not fair use.

TVEyes is a for-profit media company offering a service that allows its clients to “sort through vast quantities of television content in order to find clips that discuss items of interest to them.”  TVEyes records 1,400 channels’ worth of TV broadcasts, 24 hours a day, and makes the copied content searchable by also copying the closed-captioned text that accompanies the videos.  Clients can search for videos based on keywords and play unlimited video clips, each up to ten minutes in duration, and may archive, download, and share clips by e-mail.  Clients pay $500 per month for these services.

The District Court held that the searching, archiving, and watching functions offered by TVEyes constituted fair use, but that the downloading and e-mailing functions did not.  Fox only challenged the “watch” function (and its ancillary functions like downloading, archiving, and sharing), but not the search function.

At the outset of its opinion, the Court of Appeals noted the similarities between this case and Authors Guild v. Google, Inc., in which the court held that mass copying of books for purposes of limited text searching was fair use, but it explained that Authors Guild “test[ed] the boundaries of fair use,” and that TVEyes “has exceeded those bounds.”  In sum, the court held that TVEyes’ re-distribution of copyrighted content was only modestly transformative under the first fair use factor, but that other fair use factors outweighed any transformative purpose.  Despite myriad recent case law holding that transformative use is the most important fair use factor, the TVEyes court seemed to hearken back to a slightly earlier era of fair use and reiterated that the fourth factor – market harm – is “the single most important element.”

The court held that TVEyes’ copying could be considered transformative in that “it enables TVEyes’s clients to isolate from the vast corpus of Fox’s content the material that is responsive to their interests, and to access that material in a convenient manner.”  Similar to the Sony “Betamax” case, the court noted that TVEyes’ watch function was also akin to time- and place-shifting, and “certainly qualifies as technology that achieves the transformative purpose of enhancing efficiency,” and so was “at least somewhat transformative.”  However, the transformative character of the use was not enough to outweigh the commercial nature of the services offered because TVEyes “essentially republishes that content unaltered from its original form, with no ‘new expression, meaning or message.’”

The court found the second factor – the nature of the copyrighted works – inconsequential, but placed significant weight on the third factor, which analyses the amount of the copyrighted works made available to the public.  This factor weighed in favor of Fox because, unlike in Authors Guild where Google Books made available only snippets, “TVEyes makes available virtually the entirety of the Fox programming that TVEyes users want to see and hear,” and given the brevity of most news reports, at very least copied and distributed “the entirety of the message conveyed by Fox to authorized viewers of the original” content.

Turning to the fourth factor, the Second Circuit agreed with Fox that “TVEyes undercuts Fox’s ability to profit from licensing searchable access to its copyrighted content to third parties.”  Consumers were clearly willing to pay for such a service, and TVEyes therefore “deprives Fox of revenue that properly belongs to the copyright holder,” effectively usurping the market for Fox to offer similar aggregation, searching, and licensing services for its own content.  This usurpation, combined with the amount of content offered and the modest transformativeness overshadowed by TVEyes’ commercial use of Fox’s content, defeated TVEyes’ fair use defense.  The court remanded with instruction to the District Court to amend its permanent injunction accordingly.

Judge Kaplan of the Southern District of New York, sitting by designation, filed a separate concurring opinion to express his disagreement with the majority’s finding that TVEyes’ uses were at all transformative.  He opined that the “somewhat transformative” designation was irrelevant given that the other fair use factors outweighed the transformative use, and that issuing such dicta would serve only to confuse the already complicated question of what constitutes transformative purpose.  Nonetheless, Judge Kaplan expressed his own views on why TVEyes’ use of Fox’s content was not transformative, including that the mere “enhancing the efficiency with which copies of copyrighted material are delivered to secondary issuers” was not transformative because TVEyes simply repackaged and delivered the original content with no news aesthetics, insights, or understandings.

The Second Circuit’s decision is significant in that it further defines the outer boundaries of fair use by providing a concrete example of what falls outside the doctrine, which is helpful given the arguably expansive implications of the Authors Guild decision, and by distinguishing a facially similar service from the Google Books project it deemed fair use in that case.  It also signals a potential shift in focus back to the “market harm” factor of fair use, and away from a strict focus on transformative purpose, but at the same time adds to the growing sense of confusion about what may be considered transformative, or in this case, “somewhat transformative.”

Cowan, DeBaets, Abrahams & Sheppard LLP drafted an amicus brief in this case on behalf of American Photographic Artists, American Society of Media Photographers, Digital Media Licensing Association, National Press Photographers Association, and Professional Photographers of America, in support of Fox News Network.