MANHATTAN (CN) – TVEyes does not have a fair-use defense to claims that it violated the Fox News Network’s copyright by allowing users to access an unlimited amount of television clips, the Second Circuit ruled Tuesday.
Though a federal judge already issued a permanent injunction against TVEyes, Tuesday’s ruling from the Manhattan-based appeals court says the injunction was premised on the mistaken assumption that it was protected by fair use.
The original injunction barred TVEyes from allowing clients to download clips or to search for such clips by date and time, and it restricted TVEyes from allowing clients to email clips or to post them to social media sites.
On remand, the Second Circuit said, the court must craft a new injunction that completely enjoins the “watch” function of TVEyes.
“At bottom, TVEyes is unlawfully profiting off the work of others by commercially re-distributing all of that work that a viewer wishes to use, without payment or license,” the 19-page opinion states.
Writing for a three-judge panel of the court, U.S. Circuit Judge Dennis Jacobs noted that TVEyes exceeded the bounds of otherwise permissible transformative service.
Google Books in 2015 overcame a similar challenge, Jacobs said, because it allowed users to search for specific terms but provided only certain allowable snippets of archived books.
TVEyes can make an argument that its service is transformative — enabling “users to isolate, from an ocean of programming, material that is responsive to their interests and needs, Jacobs wrote.
Of relevance to the case here, however, Jacobs said “the commercial nature of a secondary use weighs against a finding of fair use.”
“And it does so especially when, as here, the transformative character of the secondary use is modest,” Jacobs added.
Jacobs noted that the service here competes directly with Fox as it shows “deep-pocketed consumers are willing to pay well for a service that allows them to search for and view selected television clips, and that this market is worth millions of dollars in the aggregate.”
In its complaint, Fox noted that the Connecticut-based online subscription service made more than $8 billion in 2013 alone by charging members $500 a month to watch 10-minute clips from a database containing recorded content from roughly 1,400 television and radio channels.
A few thousand business and government entities subscribe to TVEyes including the White House, Goldman Sachs, and Fox competitors MSNBC and ABC.
U.S. District Judge Lewis Kaplan sat on the Second Circuit panel by designation from the Southern District of New York. He wrote in a concurring opinion, that the Google Books case clearly limits content available through snippets, but that TVEyes allowed viewers to view likely all the Fox News content they would want to in a 10-minute clip.
Kaplan broke with the majority opinion, however, to say that efficiency-enhancing delivery technology is not necessarily transformative.
Dale Cendali, an attorney for Fox News with Kirkland & Ellis, heralded the opinion Tuesday as “a significant win in the field of fair use law.”
“We cannot emphasize enough the practical effect this win should have for content holders of all stripes in not being deprived of the benefit of monetizing content by those standing on fair use grounds,” Cendali added.
Kathleen Sullivan, an attorney for TVEyes with the firm Quinn Emanuel, did not immediately return an email and voicemail seeking comment.
Fox had claimed in its lawsuit that TVEyes initially sought a license to record its content, but then broadcast the clips without one when Fox declined.
Tuesday’s ruling reverses a fair-use finding by U.S. District Judge Alvin Hellerstein.
“TVEyes helps promote the free exchange of ideas, and its archiving function aids that purpose,” Hellerstein wrote.
Fox’s appeal to the Second Circuit did not challenge Hellerstein’s opinion regarding TVEyes’ text-searchable archive, which allows customers to search based on key words gleaned from closed-captioning text.