Copyright Fair Use Defense Not Available to Aggregator of AP News Clips

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
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A U.S. federal court has held that the publication by a media monitoring service of excerpts from Associated Press news articles is copyright infringement for which the fair use defense is not available.  The Associated Press v. Meltwater U.S. Holdings, Inc. et al., 12 Civ. 1087 (March 21, 2013).  The case provides a victory for content owners in the ongoing legal war between creators and distributors of online content.

In granting summary judgment to The Associated Press (“AP”) on copyright infringement claims against the media monitoring service Meltwater News (“Meltwater”), a judge of the U.S. District Court for the Southern District of New York found that “Meltwater’s business model relies on the systematic copying of protected expression and the sale of collections of those copies in reports that compete directly with the copyright owner”.

Meltwater offers an online media monitoring service that provides reports to its clients of news articles published on selected topics, based on keywords selected by the client.  Meltwater’s service uses algorithms to scrape content from the Internet and then deliver a digest of relevant news excerpts to its clients.

As is well known, AP is a news-gathering organization that writes and distributes many news articles each day.  AP is owned by a group of more than 1,400 newspapers across the United States, and its articles regularly appear in those newspapers.  In addition to licensing articles to newspapers and magazines, AP also licenses digital versions of its content.  Significantly, AP also has licensing agreements that permit the distribution of excerpts of its articles; some of Meltwater’s competitors had entered into such licensing agreements with AP.

AP sued Meltwater for copyright infringement based on Meltwater’s publication of excerpts from thirty-three AP articles in reports delivered to Meltwater clients.  According to the court’s opinion, Meltwater’s reports always published the headline and the lead paragraph of the AP article and also some additional material, representing between 5% and 60% of each AP article.  Meltwater relied primarily on the fair use defense, although it also argued additional defenses of implied license, estoppel, laches and copyright misuse. Meltwater’s essential argument was that its publication of AP excerpts was transformative and therefore fair because it operated as an Internet search engine that provided limited amounts of copyrighted material in response to its client’s search queries.  The court analyzed the four statutory fair use factors as follows:

The Character of Meltwater’s Use was Commercial and Competitive.   

The court held that Meltwater’s use was commercial and not transformative, because Meltwater had republished significant portions of the AP articles in a service that competed with AP’s original services.  Meltwater marketed itself as a news service and was effectively free-riding on AP’s news reporting and research (particularly given that some of Meltwater’s competitors did pay licensing fees to AP).  The court emphasized that Meltwater had chosen not to offer comprehensive evidence on click-through rates that might have shown whether Meltwater in fact operates as a search engine (where one would expect that users would click through to the original article) as opposed to a news aggregator (where one would expect that users would just skim news excerpts).  The limited evidence indicated that customers clicked through to the thirty-three AP articles at issue in the suit 0.08% of the time, but Meltwater did not provide additional evidence to give context to that rate.

The court distinguished Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007)  and Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003), two cases that had found that search engine reproductions of thumbnail-sized copyright images in search results were fair use because the search engine’s use was highly transformative.  The court made the point that using search engine technology is not the same as operating as a search engine, and does not automatically entitle a defendant to a finding of fair use.  The amount of content reproduced and the manner of reproduction are also relevant, as the above cases involved reproduction of thumbnail images different in size and detail from the originals.  In this case, Meltwater had not shown that it took only the amount of content that was necessary for it to function as a search engine.  In addition, the search engines in the two 9th Circuit cases were generally-available engines that searched a wide range of content, whereas Meltwater was a private subscription service that searched only selected sources.  Accordingly, the court found that the first fair use factor weighed heavily in favor of AP.

Non-Fiction Works, a Factor for Fair Use. 

As AP’s articles were non-fiction reports, a finding of fair use was more appropriate than in the case of copying a work of fiction, and so the court found that this factor weighed in favor of Meltwater.

Material Portions of AP’s Articles Copied. 

The evidence showed that Meltwater copied between 4.5% and 61% of the articles in question, and more importantly that the copying included the lead paragraph, which conveys the crux of the news item.  The court stated that search engines regularly display briefer segments of news articles than Meltwater did, and noted that Meltwater itself provided its customers with far shorter excerpts in markets outside the United States (in Canada, Meltwater provides only headlines, and in the UK its excerpts are far shorter than in the US).  On this basis, the court held that Meltwater had copied a significant portion of the articles and that this fair use factor weighed in favor of AP.

Significant Effect on AP’s Potential Market for the Copyrighted Work.   

The court found that this factor weighed heavily against Meltwater.  This was not a case where Meltwater’s work operated in a different market from AP’s original work.  Rather, AP had a considerable online presence and licensed its content to media monitoring services that competed with Meltwater.  Meltwater’s publication of the AP excerpts effectively replaced the AP articles and so deprived AP of licensing revenue.

Assessing all of these factors, the court found that Meltwater was a “classic news clipping service”, which was not a transformative use, and accordingly denied the fair use defense.  Meltwater issued a press release in response to the judgment which does not indicate definitively whether or not Meltwater will appeal.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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