TVEyes v FOX a Huge Deal for Copyright

One of the most important copyright cases in the country landed at the Second Circuit Court of Appeals in December of 2015. Appellants TVEyes and Fox News Network filed opening briefs, each seeking new rulings after the Court for the Southern District of New York held a split decision last year that satisfied neither party.  In July of 2013, Fox sued TVEyes—a B2B, subscription-based, news-monitoring service that records, stores, and indexes 1,400 channels—for copyright infringement of its programs.  TVEyes provides several features for its subscribers, some of which were held to be fair use by the district court while others were not. Most notably, its Content Delivery Features were held to be “necessarily infringing,” and thus the company was enjoined from further offering these services to its customers.

TVEyes is appealing on the grounds that the district court erred in not finding its whole business model, including the Content Delivery Features, a fair use of Fox’s copyrighted news broadcasts and that the court “abused its discretion” in enjoining the company from providing those services. Fox is appealing on the grounds that TVEyes is grossly misrepresenting its business model, the character of its customer base, and especially the nature of the Content Delivery Features; and it is seeking to have the entire district court ruling overturned. This case is important because, if the evidence presented in the Fox brief is an accurate portrayal of TVEyes, and if the business as it stands were held to be a fair use, that outcome could be devastating to the existence of copyright law itself.

It would be difficult to adequately summarize all of the issues raised by the combined 200 pages submitted by the appellants, but the significance of this case seems to rest on two major factors.  The first is the true nature of TVEyes’s business model; and the second is the manner in which TVEyes is asking the court to interpret both the first and fourth factors for consideration of fair use.

In simple terms, TVEyes portrays its service—so stated in its brief—as a “research only” tool akin to Google Books, and their argument relies heavily on this precedent ruling to assert that its entire service—including the Content Delivery Features—makes fair use of Fox’s copyrighted works.  But based on the evidence presented in the Fox brief, TVEyes provides services that not only excede the purposes of research, but which directly substitute existing, legal services for achieving the same commercial and non-commercial ends achieved by TVEyes.

Subscribers to TVEyes, who pay $500/month, include both private and public entities that can search any of the monitored networks for broadcasts of interest.  The TVEyes brief states that the company’s User Agreement requires subscribers to make exclsively internal use for research purposes only. In support of this claim, the brief cites examples that sound both niche and internally analytical, like “The Army uses TVEyes to track media coverage of military operations to ensure national security and safety of troops.” TVEyes’s testimony paints a picture of limited use and unprecedented capability in order to liken the service to that of Google Books.

The evidence presented in the Fox brief, however, offers a very different view of TVEyes—one that cannot be compared to Google Books for one simple reason that Google does not make whole, copyrighted books available to users, while TVEyes apparently does exacly this and quite a bit more.  According to Fox’s testimony, TVEyes provides alternative, infringing access to its subscribers who may a) view 24/7 live streaming of broadcasts; and b) download entire programs in sequential, ten-minute segments.  These video clips are also made available in high-definition without watermarks or copyright statements, and these facts alone are highly suspect since there is no need for either a news-monitoring service or its customers to cover the cost of high-def streaming for “research-only” purposes like those described in the TVEyes brief.

The high-def feature can, however, be explained by the evidence cited by Fox, which states that the majority of TVEyes’s customers (including the Army) appear to be PR firms or PR departments, to whom TVEyes has clearly advertised their service as a tool for storing and distributing unlimited TV content via email, social media, or other platforms.  Citing several examples from research, marketing materials, the Terms of Service, and TVEyes executive testimony, Fox presents a compelling argument that TVEyes is far from an internal-use-only research tool as claimed. Instead, Fox asserts that evidence proves TVEyes to be an “all-you-can-eat” subscription service that directly substitues live TV broadcast, the network’s own online offerings, and the network’s licensing regimes for PR and other uses identical to those being provided by TVEyes.

A classic example of a TVEyes use by a typical subscriber would be when an executive is interviewed by Fox Business Network, and her company wants to exploit the interview for PR purposes and/or edit the segment into an internal video, intranet, or closed-circuit news feed.  Fox (or any network) will normally license clips for these purposes; or if the use is a social media share, the Fox web portal already makes customized embeds possible according to Fox’s testimony.  TVEyes’s Content Delivery Features appear to circumvent both of these revenue streams that rightly belong to the network; and as the Fox brief notes with specific regard to the loss of online traffic through embeds, this kind of expropriation serves to hamper the development of digital strategies for all traditional news and entertainment producers.

The Fair Use Arguments

The most important doctrinal issue in this case is the manner in which TVEyes appears to be presenting its fair use defenses; and the two arguments of greatest consequence are the assertion of “transformativeness” under the first factor and the claims pertaining to market value harm done to Fox under the fourth factor.  Both arguments ask the court to read the statutes in entirely novel ways—interpretations that would come extremely close to nullifying copyright protection of any kind for anyone.

TVEyes’s claim of “transformativeness” relies on the manner in which some of its customers may use its suite of services. But as attorneys for Fox point out—and they specifically cite Google Books here—a defendant bears the burden of proving that its use is intrinsically “transformative” (i.e. novel) rather than argue that certain users of its service might make individual, “transformative” uses of works the defendant has made available to them. I know that’s a mouthful, but TVEyes is essentially arguing that if some of its subscribers make “transformative” uses of Fox news segments, this reflexively makes TVEyes a “transformative” service.

Fox appropriately argues that TVEyes’s assertion here “inverts the first factor” because its business merely substitutes existing, legally available (and well-established) services for both non-commerical and commercial TV-monitoring purposes.  Thus, the public interest is already served in this regard (and “the public” cannot afford TVEyes by the way) and that TVEyes is, therefore, not intrinsically “transformative.”  By contrast, Google Books was held to be intrinsically “transformative” no matter how people use it and because it does not provide a substitute for legal access to whole books but only makes “snippets” from books available.

Under the fourth factor, TVEyes states that Fox has not yet produced any evidence that it has sustained any market harm due to TVEyes operations.  Again, the Fox brief points out that this is a misinterpretation of the fourth factor analysis, which considers potential market harm and not market harm done up to the date of litigation. In addition to the fact that Fox does present examples of direct loss (e.g. 140,000 social media shares for PR purposes that should either be licensed or embedded from Fox’s site), the Fox brief correctly points out that TVEyes is asking the court to consider the fourth factor in a novel and unintended manner.  If an infringement suit is brought shortly after a use is made, and the claim is then countered with a fair use defense, potential market harm is the only rational consideration that can possibly be made at the time.  A court would not say to a plaintiff, “Let’s give the defendant a year or two and see if his use has an adverse effect on your sales.”  That’s not how the fourth factor fair use analysis is applied.

Even in this long post, I’ve only scratched the surface of the many details in this particular case.  But assuming the evidence provided by Fox is accurate, the manner in which TVEyes appears to be asking the courts to reinterpret fair use doctrine seems to be the existential crux of this case for the future of copyright.  There appears to be sufficient evidence that TVEyes is not merely using whole works as a database to create an index for research—as is the case with Google Books—but is making whole TV programs availalbe for mass, unlimited distribution.  As such, a finding of fair use for TVEyes appears to this layman to be tantamount to saying that copyright is no longer relevant.

© 2016 – 2017, David Newhoff. All rights reserved.

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