MANHATTAN (CN) - The Meltwater News violated Associated Press copyright with its service of sending news clips to paying customers, a federal judge ruled.
Melwater is a Norwegian "software-as-a-service" company that operates in 27 countries and made over $100 million in revenue in 2010. It began offering news-monitoring services to U.S. subscribers in 2005. The service entails search more than 162,000 news sources, including the AP, online for client-specified key words, and then sending clippings of the relevant articles straight to the client's inbox. According to the complaint, these clips include 4.5 percent to 60 percent of the original text, verbatim. Its clients include businesses, nonprofts and government agencies, and subscriptions cost thousands of dollars annually.
Unlike competing services such as LexisNexis, Google News and Cision, however, Meltwater has refused to pay AP a fee to use its content, claiming its use is "transformative" and falls under fair-use doctrine of copyright law.
Established in 1846, the AP publishes between 1,000 and 2,000 news articles a day, It says each is "the result of a process that involves a number of creative decisions by AP reporters and editors." The media giant sued Meltwater for six counts of copyright infringement in February 2012.
U.S. District Judge Denise granted the AP summary judgment last week. "AP has show through undisputed evidence that Meltwater's copying is not protected by the fair use doctrine," she wrote.
Melwater claims that it functions like an online search engine, meaning that its use of AP falls under fair use. Cote dismissed this, however, after finding that Melwater is an "expensive subscription service" and "not a publicly available tool to improve access to content across the Internet."
The service is merely the "online equivalent to the traditional news clipping service," and that "there is noting transformative about that function," according to the 91-page opinion.
Under copyright law a "use of copyrighted material that merely repackages or republishes the original is unlikely to be deemed a fair use," Cote wrote.
Meltwater meanwhile merely sends its subscribers a verbatim portion of the article "without adding any commentary or insight" and "copies AP content to make money directly from the undiluted use of the copyright material," she added.
In addition to using copyrighted AP material, Meltwater directly competes with the AP as the "central feature of its business model," the court found.
Meltwater's "own marketing materials convey an intent to serve as a substitute for AP's news service," Cote wrote.
In addition to competing with AP directing and refusing to pay AP a fee of its own, the service endangers the millions that the AP already makes annually by charging licensing fees to other news clippings services, according to the ruling.
Meltwater "cheapens the value of AP's work by competing with companies that do pay a licensing fee to use AP content in the way that Meltwater does," Cote wrote.
The opinion follows similar decisions against Melwater for copyright violation in Norway and the U.K.
In addition, it dismisses Melwater's claim that APs fees fix prices and violate anti-trust law, stating Meltwater's evidence "does not even suggest any misconduct by AP."
Cote said she will give that parties another opportunity to address the need for retrospective injunctive relief.
Meltwater meanwhile cannot have summary judgment, according to the ruling.
"Because Meltwater's motion for summary judgment is based principally on AP's failure of proof, and because AP is entitled to additional discovery on these claims, Meltwater's motion is denied without prejudice to renewal," Cote wrote.
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