After Google Books, Second Circuit’s TVEyes Decision Emphasizes Market Impact Factor in Fair Use Analysis
03/22/2018A recent decision by the Second Circuit Court of Appeals adds further complexity to the ever-evolving body of case law discussing the difficult concept of the “fair use” defense in copyright law. The case will likely be of interest to the art world because of the importance of fair use to many forms of art, from parody to appropriation art.
What is TVEyes?
The case, Fox News Network, LLC v. TVEyes, Inc., 15-cv?3885(L), involves a unique service called TVEyes. The service continuously records a huge number of television broadcasts—from more than 1400 channels—and imports that content into a database. TVEyes then makes that content searchable (primarily by also copying and importing the programs’ closed-caption text). TVEyes clients pay a fee to be able to easily locate and view segments of television programs that are responsive to their interests. Thanks to the search capability, clients can find content they want using keywords; the content is also searchable by date and time. A client can input a search term and receive a list of video clips that mention the term; they then click on a thumbnail image to view a responsive video (and corresponding segment of the text transcript). Each responsive video clip begins fourteen seconds before the search term was spoken, and can be played for up to ten minutes, but a user can play an unlimited number of clips. (The clips of up to ten minutes can also be archived on the TVEyes server, downloaded to a computer, or emailed to others. Because TVEyes otherwise deletes its recorded content after 32 days, clients must use one of these functions to retain access their selected clips for longer than that). TVEyes clients are, at least in theory, professionals and businesses, not private consumers. Clients use the service for “internal review, analysis, or research”; for example, a public relations firm might use the service to find out how someone or something is being discussed on TV.
The Court’s Decision
The plaintiff, Fox News, sued TVEyes for copyright infringement of Fox broadcasts included in the service. (Fox says that at one point, TVEyes had actually sought a license for Fox programs; Fox refused, and TVEyes included Fox’s content in the database anyway.)
A district court ruled that at least some aspects of TVEyes were protected fair use. Specifically, the lower court held that TVEyes’s functions of allowing users to search for videos by term, watch the clips, and archive the clips were fair use, but that certain other functions—including allowing the clients to download clips, email clips to others, or search for clips by date, time and channel instead of by keyword—were not.
Both sides appealed. And in an opinion issued in late February, the Second Circuit went even further than the district court, holding that none of the challenged functions of TVEyes were fair use. The court summarized that TV Eyes’s “re-distribution of Fox’s content” was “transformative” in that it allows users to sift through the large quantity of Fox content to find and conveniently access only what interests them—but that, “because that redistribution makes available to TVEyes’s clients virtually all of Fox’s copyrighted content that the clients wish to see and hear, and because it deprives Fox of revenue that properly belongs to the copyright holder,” the fair use defense failed.
To clarify, Fox did not challenge on appeal the district court’s holding that the search function itself was fair use. That is, this case was not about TVEyes’s service of allowing clients to identify videos of interest using keywords. Rather, this case focused on the “watch function”—the fact that TVEyes allows clients to view up to ten-minute clips of copyrighted content (and to save, download, or email it).
Fair Use Factors
As always in fair use cases, this decision hinges on the four statutory “fair use” factors laid out in the federal copyright law. See 17 U.S.C. § 107. Notably, the court began its analysis by reminding readers that the single most important factor is the fourth: “the effect of the use upon the potential market for or value of the copyrighted work.” And indeed, that does seem like the primary driving factor behind this decision.
In dealing with the first statutory factor, the “purpose and character” of the use, the court acknowledged this case’s similarity to the recent Google Books case, in which the Second Circuit found that a text-searchable database of millions of books was fair use, given its transformative nature. (See here and here for our previous posts on that case.) Indeed, apparently both parties relied heavily on Google Books in their arguments here. And the court agreed that, like the search capabilities of Google Books—and even like earlier case law holding that fair use protects a consumer who uses a VCR to record a television program to watch at a more convenient time—TVEyes is a form of technology that “achieves the transformative purpose of enhancing efficiency,” allowing a user to consume only the programming they need. So in this respect, the court concluded, “TVEyes’s Watch function is at least somewhat transformative.” However, that transformativity was only “modest,” because it “essentially republishes the content unaltered”; only the manner of delivery is transformative. (The court also noted that the mere fact that TVEyes could be used for research does not make it transformative.) In sum, the first factor favored TVEyes—but only “slightly.”
The second factor, the “nature of the copyrighted work,” received, as it often does, short shrift, with the court noting that this factor “rarely” plays a significant role in fair use cases. The court also rejected TVEyes’s argument that because the content at issue was “news,” and facts are not copyrightable, that should militate in TVEyes’s favor; but the court emphasized that those who report the news nevertheless create copyrightable works.
The third factor, the “amount and substantiality of the portion used in relation to the copyrighted work as a whole,” favored Fox because, as the court explained, TVEyes essentially makes available all of the Fox programming that a user might want to see. Here, the court compared TVEyes to the Google Books database and concluded that Google Books had better mechanisms to protect the rights of copyright holders whose books appeared in users’ search results. Google Books’s search results provided users with a “snippet view”—about an eighth of a page—of responsive books that contained a user’s search term. A user could view only three snippets per book per search term, and no more than one snippet per page, and for about one-fifth of each book, no snippets were available at all. Thus, a Google Books user could not use strategic searching to access a large block of text; they only received enough information to determine whether a given book contained what they needed. In contrast, a ten-minute clip of a news program is likely to provide a TVEyes user wih the “heart” of a given program, and with all of the Fox content that user needs, thus obviating the user’s need to watch the original.
Finally, as to the market effect, the court sided with Fox’s argument that TVEyes “undercuts Fox’s ability to profit from licensing searchable access to its content.” There is, clearly, a lucrative market for a service that allows clients to search and view clips of Fox’s content, and TVEyes displaces potential Fox revenue that Fox might otherwise gain from exploiting that market.
On balance, the court held, “TVEyes is unlawfully profiting off the work of others by commercially re-distributing all of that work that a viewer wishes to use, without payment or license.” It ordered the district court to revise its injunction accordingly, noting that the injunction should not bar TVEyes from offering its search function, but should be focused on the “watch” function.
A Concurring Opinion
Judge Kaplan, a trial judge from the Southern District of New York, who was sitting by designation on the Second Circuit in this case, issued a separate concurring opinion. He agreed with most of the decision and its result, but took issue with the majority’s conclusion that TVEyes’s “watch function” was at least “somewhat transformative.” He noted that the concept of “transformativity” is difficult in fair use cases, and that sometimes courts label a use “not transformative” as shorthand for “not fair.” In the interest of not contributing to the confusion and uncertainty in future cases, he felt that the majority should have simply refrained from offering an opinion on the transformativity of TVEyes’s use here, and instead ruled that the other factors outweigh any transformativity. (He also notes that, given the rapid pace of technological advancement, courts should “decline to pronounce a piece of technology transformative when it is not necessary to do so.”)
Further, he questioned the majority’s conclusion that merely “enhancing the efficiency with which copies of copyrighted material are delivered” is transformative; rather, TVEyes simply “repackage[s]” and delivers the original copyrighted content, which is insufficient for fair use purposes. Judge Kaplan distinguished Google Books, noting that the “snippet” function there delivered far less copyrighted content than TVEyes’s “watch” function. He also questioned the majority’s reliance on case law involving VCR technology, noting that that case law developed prior to the rise of “transformativeness” as a key concept in fair use jurisprudence, and moreover involved a non-commercial use that was unlikely to damage the market for the original content being recorded. Judge Kaplan disagreed with the premise that efficiency-enhancing delivery technology is transformative.
Implications For the Visual Arts Field
This case continues the ongoing conversation in appellate case law regarding transformativeness in fair use, which continues to be a hot topic in the last few years (see here, here, and here for just a few recent cases, including the Second Circuit’s landmark 2013 Cariou v. Prince decision).
Ink has been spilled in other places about the many potential policy implications of this decision; one commentator, for example, has expressed concern about the ability of the public to critically evaluate news reporting in our era of “fake news” without services like TVEyes. But on this blog, our emphasis is visual arts. And it’s difficult to predict how this case might impact cases involving visual art and appropriation art in particular, including the pending Richard Prince Instagram cases (see here for details). On the one hand, the TVEyes court’s emphasis on market substitution might be encouraging to defenders of appropriation art, who have often pointed out that it seems unlikely that a Richard Prince or Jeff Koons artwork would ever act as a market substitute for the original works appropriated by those artists. On the other hand, some have suggested that TVEyes represents something of a retreat from Cariou’s emphasis on transformativity, because here, transformativity is not the end-all and be-all of fair use. Indeed, the TVEyes court reminds litigants that, where a secondary use makes minimal change to the original content, that use is often only “slightly” transformative and that transformativity may be outweighed by other factors, particularly where the secondary use “borrows” the original in its entirety. As another writer recently noted, the only sure way to avoid potential copyright infringement liability when borrowing someone else’s content is to pay them for it. Where parties fail to reach licensing agreements, the case law must continue to grapple with the gray areas of fair use.
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