MANHATTAN (CN) - The Associated Press claims an Internet-based news aggregator uses a "parasitic business model" based on "willful exploitation and copying of the AP's and other publishers' news articles for profit," in violation of copyright.
Meltwater News "copies and delivers to paying customers substantial infringing excerpts from AP stories" without paying licensing fees, stealing AP's work and violating copyright, the AP says in its federal complaint against Meltwater News U.S. and Meltwater affiliates.
The Associated Press claims that Meltwater can undercut legitimate news providers on subscription rates because it serves no purpose "other than the distribution of news created by others."
"Meltwater has built its business on the willful exploitation and copying of the AP's and other publishers' news articles for profit," the complaint states. "Meltwater styles itself a modern day commercial clipping service. Through its Meltwater News service, Meltwater copies and delivers to paying customers substantial infringing excerpts from AP stories and other published news stories, based on keywords selected by the subscriber. Meltwater then offers its customers the ability to store these excerpts and even full text articles in a customer archive housed on Meltwater's server and to further distribute these materials.
"Meltwater thus provides a directly competing product for many AP subscribers, including government agencies and others that use the AP wire to monitor the news for breaking developments. AP bears all of the extensive costs associated with creating its content, while Meltwater bears only the minimal costs of distribution in the Internet age, and thus can undercut the AP with lower subscription rates. Meltwater even promotes its electronic news clipping service with a guarantee of 'no copyright fees.' Meltwater contributes no creative content and provides no editorial commentary. Its business serves no independent purpose other than the distribution of news created by others."
Describing Meltwater as a "parasitic business," the AP says: "Meltwater's business model for Meltwater News is built on routinely copying verbatim the heart of the AP's and other publishers' news stories and selling that content to its subscribers for a profit. It claims to pull its content from 162,000 news sources on the web. On information and belief, Meltwater does not enter into licensing arrangements with any of these news sources to deliver the original content to its own paying subscribers.
"This parasitic business model has been financially successful for Meltwater. Meltwater's website states that Meltwater today is 'one of the largest online media monitoring providers, with more than 18,000 customers worldwide.' In 2010, Meltwater made over $100 million in revenue. Meltwater currently has more than 500 employees and maintains offices in 55 offices on six continents.
"This action is not the first time Meltwater's business model has been challenged as infringing. In 2009, the District Court in Oslo, Norway, ordered Meltwater to pay a
Norwegian media rights holder organization 3.75 million Norwegian kroner, plus costs of 520,000 Norwegian kroner - a total judgment of approximately $717,00 USD - as compensation for violating applicable copyright laws. On July 27, 2011, a U.K. Court of Appeal affirmed a lower court decision holding that the content provided by Meltwater News to its users required a license from the publishers of that content." (Footnotes omitted.)
The AP adds: "In contrast to the practice of other news sources and news aggregators who deliver the AP's news reports to the public, Meltwater does not license the content that it delivers to its subscribers. Google News, Yahoo News, and AOL, for example, have negotiated agreements with AP to distribute its content. ... Critical to Meltwater's business model is the fact that it incurs no expense to create or license the content it delivers, allowing it to reap substantial subscription fees with minimal expenses while undercutting its competitors-including the AP, and other entities who have paid valuable consideration to AP for licenses to distribute its content."
The AP says that Meltwater's business works like this: "The Global Media Monitoring service offered by Meltwater News is its entry level product available to all Meltwater News subscribers. Meltwater boasts that it has 'the industry's most robust online media monitoring database.' To operate its Global Media Monitoring service, Meltwater uses computer programs known as 'spiders' or 'robots' to 'scrape' the contents of the news websites that it monitors. On information and belief, Meltwater uses the information gathered by its 'spiders' to create an index on Meltwater-owned or controlled servers of each article's metadata, which includes the position of every word in every article it retrieves, allowing it to search the full text of these articles and deliver resulting 'hits' to its clients. In doing so, Meltwater makes and stores copies of the articles it retrieves, or substantial portions thereof, in its own proprietary database, including the registered AP articles described below. Meltwater maintains an archive of stored copies of articles that it has scraped from websites since at least 2007, thus allowing current users to retrieve search results from at least 2007 forward.
"With GlobalMedia Monitoring, a customer chooses search terms known as 'agents' to track various topics. Upon information and belief, an annual subscription to the Global Media Monitoring service including 10 'agents' of a customer's choosing is priced at $5,000."
The AP adds: "Meltwater's ability to retrieve older articles no longer freely available on the Internet demonstrates that Meltwater reproduces copies of articles and saves these copies on its own system, including ... registered AP articles[.] ... Such copying is a willful violation of the exclusive rights of content owners to reproduce these original copyrighted works, including works owned by the AP. Further, when Meltwater News provides 'dead links' for these older articles, no traffic can be driven to the originating site, namely AP's licensee."
The AP seeks an injunction and actual, statutory and punitive damages for copyright infringement, vicarious copyright infringement and misappropriation of "hot news."
The AP adds: "Meltwater's Global Media Monitoring Service and associated products are merely a way for Meltwater to free-ride on AP's significant investments in gathering and reporting accurate, timely news, including breaking news. Meltwater earns substantial fees for distributing premium news content while bearing none of the costs associated with gathering, creating, or even licensing that content. Moreover, Meltwater free-rides on a grand scale, selling excerpts from and access to all AP stories accessible on the Internet."
The AP is represented by Elizabeth McNamara with Davis Wright Tremaine.
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