TVEyes LogoFair use rulings are generally not earth-shattering. As a very fact-specific area of copyright law, individual fair use rulings tend to apply more to the case at hand than the broader legal landscape.

This means that court rulings on fair use tend to shift at a glacial pace. Not through one sweeping ruling, but rather, through the slow drift of countless smaller rulings.

Still, every once in a while there’s an earthquake that can shake up the fair use landscape and send it drifting in another direction.

One such example of this is the 1994 Supreme Court’s decision in the case Campbell v. Acuff-Rose Music, Inc.. The case, which dealt with a parody of the Roy Orbison song Pretty Woman, found the parody work to be a fair use and non-infringing. The case not only strengthened protections for parodies under fair use but emphasized the importance of “transformativeness” when analyzing a use for fair use.

The transformativeness doctrine became the leading guidance on fair use in the years after. It was cited in other major fair use cases including Perfect 10 v. Amazon, Authors Guild v. Google and Kelly v. Arriba Soft.

However, a recent ruling from the Second Circuit Court of Appeals may challenge the dominance of transformativeness.

If it holds up, it could change the shape of fair use for decades to come. 

Background of the Case

Fox News LogoTVEyes is a media clipping service that works by archiving content from television and radio and then transcribing it to make it text-searchable. It’s commonly used by companies or celebrities to find out when they are mentioned in the media and is also used by TV shows like The Daily Show to find clips relevant to a story they are working on.

In 2014 Fox News filed a lawsuit against TVEyes for alleged copyright infringement. They claimed that TVEyes was using their content without a license and doing so in an infringing way. Though Fox never claimed the search function was infringing, it took issue with the way TVEyes allowed both playback and sharing of clips from their TV shows.

TVEyes claimed that their use is a fair use, especially since they limit access to 10-minute clips and only to content relevant to the search.

The lower court ruling on summary judgment was something of a mixed bag for the parties. Though the court found that the video archiving and downloading was a fair use, it took issue the emailing and sharing features of TVEyes and moved those issues toward a potential trial. While this may have opened up TVEyes to a significant amount of liability, the ruling gave both TVEyes and any similar services guidelines for how to remain on the right side of fair use.

Both parties appealed the ruling to the Second Circuit Court of Appeals. TVEyes felt the lower court didn’t go far enough while Fox felt the lower court went too far. The Second Circuit has sided completely with Fox News, ruling not only that the sharing features are infringing, but overturning all of the lower court’s findings of fair use.

The finding itself isn’t necessarily that shocking. Many felt TVEyes was stretching the bounds of fair use before this ruling. However, it’s the logic the court use to arrive to the conclusion that may represent a ground shift.

To understand that, we have to look back at the recent history of fair use and where this ruling might fit in.

Why This Ruling May Be Important

When looking at whether a use is a fair use, courts in the U.S. analyze four factors to make their determination. Those factors are:

  1. the purpose and character of your use
  2. the nature of the copyrighted work
  3. the amount and substantiality of the portion taken, and
  4. the effect of the use upon the potential market.

The first and fourth factors are widely regarded as the most important. However, the first, which is the measure of transformativeness, leapt out as the most important factor after  the Campbell case.

That has meant it’s been difficult, if not impossible, for a rightsholder to win a case when the defendant can show that their use is transformative. To make matters worse for plaintiffs, the definition of what is considered transformative seemed to be ever-expanding.

This reached a possible zenith in 2013 when the Second Circuit ruled appropriation artist Richard Prince was not infringing photographer Patrick Cariou by taking his photos and drawing on them. In that case, the court ruled that the transformativeness did not hinge on Prince making commentary about Cariou’s work or even pop culture at large.

What makes the TVEyes ruling shocking and possibly groundbreaking is that the court agreed that TVEyes’ video function was transformative and that the first factor favored TVEyes, “albeit slightly”.

The problem was that the transformative nature of TVEyes was outweighed, in the court’s eyes, by the fourth factor, which looks at the potential harm to the market. According to the court, the success of TVEyes shows that there is a potential market for Fox’s content in this are and that, by not obtaining a license from Fox, are harming their ability to exploit their own work.

According to the court, this harm to the market outweighed the transformative nature of TVEyes and made the service an infringement.

The court also paid special attention to the third factor, which the court said favored Fox because end users of TVEyes could “see and hear virtually all of the Fox programming that they wish.” In drawing that conclusion, the court looked not at how much of Fox News’ content TVEyes used, which was 100%, but at how much end users could access and ruled in favor of Fox.

(Note: For those wondering, the second factor was considered both unimportant and neutral in this case.)

In a time where transformativeness seems to be king of fair use, this ruling marks a strong rebuff of its status, reinforcing the notion that courts must analyze all of the fair use factors.

In short, transformativeness may still be the most important factor but, at least before the Second Circuit, it might not reign alone.

Questions and Answers

US Court of Appeals CircuitsAll of this leaves us with a rapid fire series of questions to answer:

1: What Happens Now? 

The Second Circuit sent the case back to the District Court to move forward to a possible trial. However, before that happens it’s likely that TVEyes will first ask the Appeals Court to reconsider the ruling and, failing that, may appeal it to the Supreme Court.

The Supreme Court will have the choice of whether or not to take the case. Though the odds are better than normal, when you consider how few cases the Supreme Court actually hears, it’s still not likely to be heard there, at least not until more courts weigh in.

Still, there’s a lot of road ahead in this case barring a sudden settlement.

2: How Does it Change Copyright Immediately?

Not much, especially outside of the Second Circuit (see map above). Since this is an Appeals Court ruling and not a Supreme Court ruling, it could be overturned and other courts can take a different position.

As this ruling is cited or ignored, we’ll learn more about its place in the legal landscape.

3: What Could it Theoretically Change?

If the ruling survives the test of time, it means that transformativeness will not be the nearly sole deciding factor in fair use cases. Uses that can have a significant impact on the potential market of a work can found to be infringing, even if they are transformative in nature.

Transformativeness will still be very important, but this ruling checks it against the other factors, in particular the fourth.

Another important element is that Fox did not challenge the gathering of the content TVEyes used. Instead, it only challenged what was presented to the end user, which opens up the door to greater scrutiny of how such products are used versus how they are created.

4: Is It Good or Bad?

Depends on who you ask. The Electronic Frontier Foundation has called the ruling “terrible” and slammed the logic behind it as “circular”. Meanwhile, the Disruptive Competition Project calls the ruling “fair and balanced” (making a play on Fox News’ tagline).

Many rightsholders have long expressed concern that the transformativeness standard had gone too far and that cases like Richard Prince’s had pushed it over a cliff. While this case would not necessarily overturn that one (it was heard in the same court after all), this is still a clear sign the court is turning the spotlight away from transformativeness and to the other factors.

Others, however, liked the more simple and more permissive fair use test that came from a heavy focus on transformativeness. Those who support a broad fair use exemption find this ruling to be limiting.

What you think about this ruling is probably determined by which side of that divide you’re on. In reality though, we won’t know the impact of the ruling for some time.

Bottom Line

Though some rulings are immediately known to be groundbreaking, many others only become so in hindsight. This is possibly one of the latter.

Since this is just an Appeals Court ruling (not a Supreme Court ruling), there’s still a long way to go with both this ruling and this case. However, if it stands up, it could represent a major pivot in the way that courts think about fair use.

The same way that Campbell changed the way courts thought about transformativeness, this could change the way courts think about the remaining factors and, as with Campbell, begin a drift of the courts as they follow and adopt it.

That isn’t certain yet but this ruling has turned what was a fairly mundane copyright lawsuit into one that definitely needs to be watched.

While it may still wind up being an unimportant ruling, it has the real potential to be a landmark one that is called back to many times in the near future…

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