Court Rules for Fox News Channel in TVEyes Case - Multichannel

Court Rules for Fox News Channel in TVEyes Case

Says clips service use was transformative, just not fair
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A federal appeals court has agreed with Fox News Channel that TVEyes' service of copying and providing, for a price, searchable access to vast quantities of the cable news network's programming is not fair use.

A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit Tuesday (Feb. 27) overturned a district court decision and upheld an injunction against the practice. TVEyes is a business-to-business service provider with clients including journalists, government and political organizations, and marketers; it is not offered for consumer use.

TVEyes records more than 1,400 TV and radio channels, and provides a database that allows clients, for $500 per month, to search the programming and view up to 10-minute clips, as well as archive those clips.

The court agreed with Fox News that TVEyes' redistribution of the network's content was a transformative use, as fair uses must be, but because it potentially made virtually all of FNC's copyrighted content available, and because the network doesn't get any of the monthly subscriber fees, the service "deprives Fox of revenue that properly belongs to the copyright holder."

The court said TVEyes had failed to show that its product was a fair use and asked the district court to fix its injunction against some parts of TVEyes, which had excluded the clip-searching/viewing function.

The district court had found some functions of the service not to be fair use, including allowing subs to download clips to their own computers, email videos to others and to watch videos after searching for them by date, time or channel rather than keyword, but deemed that enabling clients to search for videos by term, then watch them, and archive them on TVEyes' server was fair use.

The Ninth Circuit disagreed.

TVEyes had argued, for one thing, that since facts are not copyrightable, the factual nature of Fox News's content militated in favor of a fair use finding, said the court, which rejected that argument. "Those who report the news undoubtedly create factual works," the court said. "It cannot seriously be argued that, for that reason, others may freely copy and re-disseminate news reports."

The court also found that the 10-minute clip limit, given the length of news stories, probably gives TVEyes subscribers access to all the Fox News programming they need.

As to the impact on Fox's business, TVEyes said that it posed little risk of supplanting Fox News's own offering of its programming, but Fox argued it undercut its ability to profit from licensing its own searchable access to the content to third parties. "Fox has much the stronger point," the court concluded.

In fact, TVEyes' success, the court said, demonstrated that there was a clip-searching market worth millions, and TVEyes could plausibly displace potential Fox revenue from that market by providing access to that copyrighted content without Fox's permission.

"At bottom," said the court, "TVEyes is unlawfully profiting off the work of others."

“This is a significant win in the field of fair use law because to the extent that transformativeness has become the litmus test of fair use for some courts, the court in this case, similar to the Harry Potter Lexicon case, held that even where a use may be modestly transformative, it is critical for a court to evaluate all of the fair use factors," said Dale Cendali of Kirkland & Ellis, Fox's outside lead counsel. "[T]he Second Circuit was very clear that TVEyes cannot offer any of Fox’s audio visual content whether by viewing, downloading, sharing, or archiving,"  "We cannot emphasize enough the practical effect this win should have for content holders of all stripes in not being deprived of the benefit of monetizing content by those standing on fair use grounds."

 J. Michael Keyes, partner in the law firm of Dorsey & Whitney, who has been folloing the case, said: "There is a clear hierarchy emerging in the fair use calculus. The 'market harm' factor is the most important consideration when it comes to fair use. And, if the defendant’s use is generating a substantial amount of revenue to defendant, then the court will likely find that the plaintiff has suffered a 'market' harm—even if plaintiff doesn’t necessarily use its copyrighted content in the same manner as the defendant [the court's finding that the use was transformative, just not fair]. This is an important (if not the most important) consideration in the context of fair use."

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