• by Wendy Davis  @wendyndavis, February 27, 2018

Siding with Fox News, a federal appeals panel in New York has ruled that the TVEyes' video-clipping service is not protected by "fair use" principles.

In a decision issued Tuesday, a three-judge panel of the 2nd Circuit Court of Appeals ruled that Fox was entitled to an injunction prohibiting TVEyes from continuing to offer its clients video clips from Fox's news programs. "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 judges wrote.

The battle between Fox and TVEyes dates to 2013, when Fox alleged in a lawsuit that TVEyes infringed copyright with its $500-a-month online monitoring service -- which is used by journalists, the White House, politicians and the U.S. military, among others. TVEyes records and indexes news programs from 1,400 stations, and allows subscribers to search for news clips by keywords and access portions of the shows.

U.S. District Court Judge Alvin Hellerstein in Manhattan issued a mixed ruling in the case. In September of 2014, he said TVEyes makes fair use of Fox's material by indexing its news clips and providing snippets of them to subscribers. But the following year, he ruled that other components of TVEyes' service infringed copyright.

Both companies then appealed to the 2nd Circuit. Fox News argued at a hearing last year that its ability to market its clips, or to create a market for clips in the future, was being thwarted by TVEyes.

TVEyes countered that its service was protected by fair use principles because it's "transformative" -- offering not simply access to news and entertainment but also the ability to analyze companies' approach to the news. TVEyes' lawyer Kathleen Sullivan told judges that a subscriber used the service to learn that one station devoted the first seven minutes of a broadcast to a story, while a competing station only spent half a minute on the same news.

TVEyes' lawyer also compared the service to Google Books, which defeated a copyright infringement lawsuit by the Authors Guild. Google digitizes books in order to make them searchable, and displays snippets in response to keyword searches.

In the decision issued Tuesday, Circuit Judges Jon Newman and Dennis Jacobs ruled that TVEyes' service was transformative, but nonetheless not protected by fair use because it harms Fox's ability to monetize its content. (A third judge said in a separate opinion that he didn't think it was necessary to opine on whether TVEyes was transformative.)

"TVEyes’s re-distribution of Fox’s content serves a transformative purpose insofar as it enables TVEyes’s clients to isolate from the vast corpus of Fox’s content the material that is responsive to their interests, and to access that material in a convenient manner," Newman and Jacobs wrote. "But because that re-distribution makes available to TVEyes’s clients virtually all of Fox’s copyrighted content that the clients wish to see and hear, and because it deprives Fox of revenue that properly belongs to the copyright holder, TVEyes has failed to show that the product it offers to its clients can be justified as a fair use."

Newman and Jacobs also said in the ruling that TVEyes went further than Google did when it made books searchable, noting that Google showed only a small portion of the books it had digitized, but TVEyes showed longer clips.

"TVEyes redistributes Fox’s news programming in ten-minute clips, which -- given the brevity of the average news segment on a particular topic -- likely provide TVEyes’s users with all of the Fox programming that they seek and the entirety of the message conveyed by Fox to authorized viewers of the original," the judges wrote.

The opinion notes that Google's snippet function "was designed to ensure that users could see only a very small piece of a book’s contents."

Copyright expert Eric Goldman, a law professor at Santa Clara University, says that TVEyes' one-size-fits-all approach to displaying snippets of programs appears to have hurt its argument.

"TVEyes' snippetting policy wasn't nuanced at all, and that bothered the court," Goldman says.

The ruling may be especially significant because in recent years, the 2nd Circuit appeared to give great weight to whether a use was "transformative" when deciding fair use questions, copyright attorney Craig Whitney, a partner at the law firm Frankfurt Kurnit Klein & Selz, tells MediaPost. But the decision issued Tuesday suggests that the appellate court (which is based in New York and often rules on cases brought by media and entertainment companies) will take a hard look at a different factor -- whether a particular use harms the content owner's ability to market its work.

Fox's outside attorney Dale Cendali of Kirkland & Ellis LLP characterized the decision as a "sweeping victory" for the company. She added that the decision marked a "significant win in the field of fair use law."

The ruling allows TVEyes to continue to offer a search engine, provided it doesn't also make "impermissible use of any protected audiovisual content."

TVEyes hasn't yet said how it intends to proceed.