In his 2015 Second Circuit opinion in Google Books, U.S. Circuit Judge Pierre N. Leval observed that the case “test[ed] the boundaries of fair use.” Authors Guild v. Google, 804 F.3d 202 (2d Cir. 2015). Three years later, at the outset of its decision in Fox News Network v. TVEyes, 883 F.3d 169 (2d Cir. 2018), the Second Circuit repeated that caution in holding that “defendant TVEyes has exceeded those bounds.” Although TVEyes had attempted to structure its business model in a manner that could at least arguably fall within the circumstances in Google Books, the court determined that significant differences resulted in balancing the fair use factors decisively against fair use. Notably, its finding that the use was “at least somewhat transformative” did not counterbalance the impact of the substantiality of the taking and the detrimental market effect of TVEyes' use of Fox News Network's news broadcasts.

TVEyes' Business Model

TVEyes, a for-profit media company, offers a service enabling its clients “to efficiently sort through vast quantities of television content in order to find clips that discuss items of interest to them.” Id. at 174-75. For example, a public relations firm specializing in damage control might want to keep track of how often an embarrassing news item about its client has appeared in a recent news cycle, or a corporate marketing department might want to quickly gather all recent mentions of its newly introduced mobile phone.

TVEyes utilizes technology that continuously (24/7) records all television broadcasts from over 1,400 channels, including the copying of close-captioned text accompanying the broadcast and, when necessary, using speech-to-text software to capture the spoken words. TVEyes then creates text-searchable transcripts of all of the videos and consolidates them into a comprehensive text-searchable database that it makes available to its clients for various uses, including two core functions of the database.

The first core function—the “Search function”— provides a list of video clips that mention search terms input by the client. This function, which does not enable any viewing of a video clip, was not challenged by Fox. The second core function—the “Watch function”—enables a client to view video clips (no longer than 10 minutes each) containing the search terms. The Watch function was the focus of FNN's challenge and of the court's fair use analysis. The court viewed other functions made available by TVEyes, such as archiving, downloading and emailing the video clips, as subsidiary to the Watch function and therefore did not separately analyze them for fair use.

The Court's Fair Use Analysis

The court analyzed each of the four nonexclusive fair use factors set forth in §107 of the Copyright Act, which provides, inter alia:

[T]he fair use of a copyrighted work, including … for purposes such as criticism, comment, news reporting, teaching … scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

17 U.S.C. §107. (Because the court considered the four enumerated factors to be sufficient in this case for a determination of fair use, it did not include other factors in its analysis.)

First Factor: Purpose and Character of the Use. As established by the Supreme Court in Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994) and applied by the Second Circuit in Google Books and the related HathiTrust case, 755 F.3d 87 (2d Cir. 2014), the central inquiry under the first factor is whether the use is “transformative”—that is, a use that “add[s] something new, with a further purpose or different character, altering the first with new expression, meaning or message … .” TVEyes, 883 F.3d at 176 (internal citations and quotation marks omitted). A use that “merely repackages or republishes the original is unlikely to be deemed a fair use.” Id. at 177 (internal citations and quotation marks omitted). The court also set forth a guiding principle articulated in Campbell and followed in Google Books and HathiTrust: “Although … transformative use is not absolutely necessary for a finding of fair use, … [transformative] works … lie at the heart of the fair use doctrine.” Id. (internal citations and quotation marks omitted).

TVEyes contended that, as in Google Books, its creation of a comprehensive text-searchable database served a different purpose than viewing the video clips. The court found that the Watch function “is similarly transformative insofar as it enables users to isolate, from an ocean of programming, material that is responsive to their interests and needs, and to access that material with targeted precision.” Id. The majority opinion, by U.S. Circuit Judge Dennis Jacobs and joined by U.S. Circuit Judge Jon O. Newman, viewed the Watch function as having a transformative purpose, which it characterized as enhancing efficient access to video clips containing items of interest appearing during the previous 32 days without having to view a veritable ocean of programming. On this point, U.S. Circuit Judge Lewis A. Kaplan (S.D.N.Y.), sitting on the panel by designation, strenuously disagreed in a concurring opinion. Judge Kaplan stated that he found nothing in any precedent to support the proposition that the enhancement of efficiency constituted a transformative purpose. TVEyes, 883 F.3d at 189 (Kaplan, J., concurring).

In any event, in its overall evaluation of the first factor, the majority weighed TVEyes' use only slightly in its favor for two reasons: (1) the commercial nature of the use weighed against fair use; and (2) “[t]he Watch function has only a modest transformative character because, notwithstanding the transformative manner in which it delivers content, it essentially republishes that content unaltered from its original form, with no new expression, meaning or message.” Id. at 178 (internal citations and quotation marks omitted).

The Second Factor: Nature of the Copyrighted Work. As in almost all fair use decisions, the second factor was not considered significant in the overall analysis. The court did, however, reject TVEyes' argument that the factual nature of Fox's news reports weighed in favor of fair use. Rather, the court stated: “It cannot seriously be argued that, for that reason, others may freely copy and re-disseminate news reports.” Id. (internal citations and quotation marks omitted).

Third Factor: Amount and Substantiality of the Portion Used. Although recognizing that, in Google Books, the complete copying library collections into a database did not preclude weighing this factor in favor of fair use, the court distinguished TVEyes' use as radically different in its delivery of the copied content. TVEyes' service enables clients to watch up to ten minutes of each video clip and, given the brevity of the average news segment, viewing ten minutes of each clip “likely provide[s] 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.” Id. at 179. In contrast, the snippets made available in Google Books were brief and displayed with so many restrictions that they were not found to make any substantial amount of the copyrighted works available to the users. Because TVEyes' use was “both extensive and inclusive of all that is important from the copyrighted work,” id. (internal citations and quotation marks omitted), the court weighed the third factor against fair use.

Fourth Factor: Effect on the Market for the Copyrighted Work. The court prefaced its discussion of the fourth factor by stating that it is “'undoubtedly the single most important element of fair use.'” Id. at 180 (quoting Harper & Row Publishers v. Nation Enters., 471 U.S. 539, 566 (1985). Although this statement is quoted from the Supreme Court's 1985 decision in Harper & Row (and appears in many fair use decisions), see, e.g., Google Books, 804 F.3d at 214; HathiTrust, 755 F.3d at 96, it was not repeated in the Supreme Court's 1994 opinion in Campbell.  Moreover, in view of the emphasis in Campbell that transformative works “lie at the heart of the fair use doctrine,” its admonition against bright line rules, and its instruction to consider how each factor impacts on the others, one might question the characterization of the fourth factor as the most important. Moreover, in practice, the initial analysis of transformative use under the first factor often presages the determination of market harm under the fourth because the different nature and purpose of a transformative use makes market substitution unlikely.

TVEyes exemplifies the symbiotic relationship between first and fourth factor inquiries in its findings that the only slightly transformative use was insufficient to avoid the Watch function's severely negative impact on the market for FNN's news broadcasts. The court considered TVEyes' own successful marketing and exploitation of FNN's video clips to be persuasive evidence that TVEyes' Watch function usurped a market that Fox either could license or exploit itself.

Overall balance. As instructed by the U.S. Supreme Court in Campbell, 510 U.S. at 578, the court proceeded to weigh the factors together, in light of the purposes of copyright. Only one factor—the first—weighed in TVEyes' favor, and only slightly. The second was neutral, and the third and fourth strongly favored Fox. The court therefore held:

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. Having weighed the required factors, we conclude that the balance strongly favors Fox and defeats the defense of fair use.

TVEyes, 883 F.3d at 181.

Conclusion

TVEyes stands out as a notable reminder that “[t]he task [of fair use analysis] is not to be simplified with bright-line rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis.” Campbell, 510 U.S. at 577. Notwithstanding the court's finding of a “slightly transformative” use balancing the first factor in favor of fair use, the substantiality of the copying and the substitutive market impact weighed heavily against fair use, resulting in an overall balance against the defense. Thus, TVEyes' attempt to fit within the already extended fair use boundaries established in Google Books was unavailing.

Robert J. Bernstein practices law in The Law Office of Robert J. Bernstein.