On February 27, 2018, in Fox News Network, LLC v. TVEyes, Inc., Case No. 15-3886 (2nd Cir. 2018), the U.S. Court of Appeals for the Second Circuit held that certain functions of TVEyes, a TV database service, do not qualify as fair uses under the Copyright Act. According to the panel, TVEyes' service impermissibly exceeded the boundaries laid down for fair use in the Second Circuit's prior decision in Authors Guild v. Google, Inc., 804 F.3d 202 (2nd Cir. 2015) ("Google Books"). The court's opinion contains important statements about the scope of fair use that may be relevant to WSGR clients.

What TVEyes Does

TVEyes records more than 1,400 channels of television programming, 24 hours a day, and copies the closed captioning text that accompanies that content. The content and text are consolidated into a database, which clients can query with keyword searches. When a client finds and selects a result, they can view a segment of broadcast programming that is up to 10 minutes long and contains the specific result.

District Court Opinion

In the course of two significant rulings in the district court, Judge Alvin Hellerstein of the U.S. District Court for the Southern District of New York drew a distinction between the various functions of the TVEyes service. The core search and display functions, which allow users to locate and watch broadcast content via keyword search, were held to be fair use. However, the district court found that certain other auxiliary features of TVEyes' service were not fair use, such as those "enabling clients to download videos to their computers, to freely e-mail videos to others, or to watch videos after searching for them by date, time, and channel (rather than keyword)."

The Second Circuit's Fair Use Analysis

The Second Circuit approached the case somewhat differently. It divided the inquiry between the "Search" functionality of the service and the "Watch" functionality. The court noted that TVEyes' "Search" functions—considered to be fair use by the district court—were not challenged on appeal, but held that TVEyes' "Watch" functions did not qualify as a fair use. That holding subsumed and obviated consideration on appeal of the various subsidiary functions, including viewing, archiving, downloading, and emailing video clips. The court's analysis centered around the familiar statutory fair use factors of 17 U.S.C. § 107.

First, the panel determined that TVEyes' service was only "somewhat transformative." The panel found that TVEyes' "Watch" function was similar to the service in Google Books because it enabled users to find, isolate, and access material responsive to a customer's interest "that would otherwise be irretrievable, or else retrievable only through prohibitively inconvenient or inefficient means." However, because the "Watch" function republished TV broadcasts unaltered, and because the service was commercial, the factor weighed only slightly in favor of fair use.

On the second factor, the nature of the copyrighted work, the Second Circuit followed several previous precedents in finding that although news broadcasts often contain factual content, they are still copyrightable works and their nature weighs against a finding of fair use.

The court's discussion of the third factor, the "amount and substantiality" of the portion used, weighed against fair use as well. The panel held that, unlike the "snippets" of text in Google Books, 10-minute video segments of a given channel's programming could convey to TVEyes' customers the entirety of the protectable expression of the copyright holder. Although the Second Circuit endorsed permitting a user to view roughly three lines of text on any given page in Google Books, providing up to ten minutes of a program could provide "all that is important" from a given news segment. This factor, the court held, weighed significantly against a finding of fair use.

On the final factor, the effect of the secondary use on the potential market for the original work, the court, somewhat surprisingly, focused on the nature of TVEyes' business: "The success of the TVEyes business model" the court explained, demonstrates the existence of a "plausibly exploitable market" for Fox. The court stated that TVEyes was "in effect depriving Fox of licensing revenues from TVEyes or from similar entities" and had "usurped a market that properly belongs to the copyright holder." This formulation suggests that, at least in some cases, the fact of commercial success of a secondary use may be treated as evidence against a finding of fair use.

TVEyes may help fill in aspects of the fair use analysis left unclear after the Second Circuit's rulings in HaithiTrust and Google Books. While the decision did not cast doubt on the proposition that traditional search engines are protected by fair use, TVEyes shows that even a "transformative" use can still be infringing. The court's discussion of the final factor, the effect on the market for the original work, seems particularly significant, as the panel suggested that a secondary user's profitable business model may, in and of itself, reflect market harm for the copyright owner. If this understanding prevails, TVEyes will make it more difficult for revenue-generating defendants to establish fair use.