In March, Judge Denise Cote of the U.S. District Court for the Southern District of New York granted summary judgment in favor of the Associated Press holding Meltwater liable for copyright infringement. Meltwater is an international “software as a service” company operating in 27 countries. In the United States, Meltwater offers a news monitoring service to subscribers. The service combs thousands of online news services — including an estimated 1,200 websites authorized to publish the Associated Press’ content — searching for keywords chosen by each subscriber. The service then sends a report to the subscribers incorporating excerpts of relevant articles. The Associated Press filed suit against Meltwater last year raising six counts, four of which related to copyright infringement of 33 articles. In turn, although Meltwater raised a number of defenses and counterclaims, the company principally argued that its conduct fell under the doctrine of “fair use”.
However, Judge Cote disagreed with Meltwater. In particular (and in a very lengthy opinion — 91 pages!) the Judge rejected Meltwater’s assertion that its service was akin to an internet search engine that acted as a tool for its subscribers to locate information. In her Opinion and Order, Judge Cote wrote that it is “an expensive subscription service that markets itself as a news clipping service, not as a publicly available tool to improve access to content across the Internet.”
Judge Cote’s decision presents a number of interesting points. For purposes of this post, her analysis of fair use is worth noting. In general, courts consider the following non-exhaustive factors set forth in 17 U.S.C. § 107 when evaluating the applicability of the fair use doctrine:
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(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 copyright work.
The vast majority of the Judge’s analysis was devoted to the “first” factor. The first factor requires addressing:
Whether the new work merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning or message; it asks, in other words, whether and to what extent the new work is transformative.
(quoting Campbell v. Acuff-Rose Music, 510 U.S. 569, 579 (1994)). As Judge Cote explained, use of copyright protected content that “merely repackages or republishes the original is unlikely to be deemed a fair use” because a mere “change of format” is not considered “transformative”. Judge Cote concluded that Meltwater’s service was not transformative but was merely the “online equivalent to the traditional news clipping service” insofar as it merely “copies [the Associated Press’] content to make money directly from the undiluted use of the copyrighted material” and “without adding any commentary or insight….” One of the most significant facts cited by Judge Cote was her conclusion that Meltwater excerpted between 4.5% and 60% of the articles, including the lead which Judge Cote described as the “heart” of the story. Because the essence of the articles had been reproduced by Meltwater, subscribers “rarely clicked-through to the underlying articles” — only “0.08% of the time.” Thus, “[i]nstead of driving subscribers to third-party websites, Meltwater News acts as a substitute for news operated or licensed by [the Associated Press].”
The popularity and proliferation of services that either provide access to or excerpts from content from other websites will likely test the limits of the fair use doctrine in the near future. We expect this to be a “hot” issue as the marketplace for such services becomes increasingly crowded and competition to woo subscribers increases.
The case is The Associated Press v. Meltwater U.S. Holdings, Inc., et al, 12-CV-1087 (S.D.N.Y.). In addition to awarding the Associated Press summary judgment, the Court ordered that the parties will now address whether the Associated Press is entitled to retrospective injunctive relief. We will continue to update our blog concerning this case as well as other developments in copyright law and copyright litigation.
