Last week in The Associated Press v. Meltwater U.S. Holdings, Inc., a federal district court in New York held that the internet news monitoring service, Meltwater, infringed upon the copyrights of the Associated Press (AP) when it compiled excerpts of AP articles and distributed them to its subscribers.
How it all started . . .
AP is a national news organization that is owned by over 1,400 newspapers, produces between 1,000 and 2,000 articles per day, and earns a majority of its revenue by selling its news products to over 8,000 licensees. In recent years, AP license holders have begun to publish many of its products online. Today, AP’s digital customers account for more than $75 million of the company’s gross annual income. In addition, AP has license agreements with three Online Media & Monitoring Services, which allow the companies to distribute “snippets” of AP articles as part of an aggregated feed on licensed content.
The problem in the case started when Meltwater, an online monitoring service without a license to distribute AP’s materials, began including AP article excerpts in feeds to its online subscribers. Meltwater uses an automated computer program to “scrape” online articles and index them for subscribers in response to key word queries. Meltwater’s indexed reports included headlines and excerpts of AP articles, which contained between 4.5 and 61% of the articles original text.
In response, AP brought suit after finding Meltwater distributed portions of thirty-three different AP registered articles. Meltwater raised five affirmative defense in response to the AP suit, including possession of an implied license, estoppels, laches, copyright misuse, and most importantly, fair use of the registered articles.
The Copyright Fair Use Doctrine
The Fair Use Doctrine stipulates that “the fair use of copyright work . . . for purposes such as criticism, comment, news reporting, teaching . . . scholarship, or research, is not an infringement of copyright.” 17 U.S.C. § 107. Meltwater claimed that its use of the AP articles was fair because it only delivered excerpts of the copyrighted materials in the same manner as an Internet search engine, and because the service was “transformative” of the original works. Denying Meltwater’s defense, the court looked at four factors to apply the fair use doctrine:
(1) Is the purpose of the use commercial or educational?
First, the court held that Meltwater’s use of the AP article excerpts was commercial and not educational in nature. Although news reporting and research are two primary factors under the Fair Use Doctrine, because Meltwater was not using the articles to conduct its own research and writing, but was instead replicating the work put in by AP, the court determined there was no higher research or reporting purposes furthered by Meltwater’s actions.
What’s more, although Meltwater claimed its service was similar to any other search engine, which provides easy public access to the internet, the court explained that becuase Meltwater’s required subscribers to pay expensive fees, its service to the public was much less important.
(2) What is that nature of the copyrighted work?
Second, the court explained that Meltwater’s use of the AP material was not “transformative” because Meltwater was essentially free-riding on AP’s research and reporting systems. Although Meltwater was using search engine technology, and the court had previously held that search engines may be transformative in nature, because Meltwater’s services took more original content than was necessary to act as a search engine, and because it charged significant fees in order to access its service, its use of the AP material was not transformative.
(3) What amount was used compared to the copyrighted work as a whole?
Third, because Meltwater used between 4.5 and 61% of the original material from the AP articles, the court explained that this factor weighed heavily against the monitoring service. The court focused on the fact that Meltwater replicated not only the titles of the AP articles, but also the first paragraph or two, where the most important information of the article is located. Thus, the service not only copied a large percentage of the copyrighted works, but also used the most important parts of the articles.
(4) What effect does the use have upon the marketability of the original work?
Finally, the court emphasized that because Meltwater was not in a separate market, and was instead competing directly with AP and its online licensees, Meltwater’s use of the AP article excerpts would severely limit the marketability of the original AP content. While the court’s decision here was certainly a victory for internet content holders like AP, now it’s time to wait and see if Meltwater will appeal.