view

The Easy Way to Avoid Copyright Infringement: Pay

If we're going to have the law, sometimes innovative companies will get pinched.

You can't watch everything at once.

Photographer: Sean Gallup/Getty Images

It pains me to disagree with my friends who fight for free speech online, but I think the U.S. Court of Appeals for the 2nd Circuit was correct in holding that a part of TVEyes Inc.’s business model violates copyright law. TVEyes has developed a text-searchable database of all television programming. Its clients can quickly and easily find out when and how often particular words or phrases have been used in broadcasts, and then watch short clips to show the context. This week, in Fox News Network v. TVEyes Inc., the 2nd Circuit banned the part of the service that involves the clips.

Back when I taught copyright law, I would tell my students that every accused infringer claims fair use -- and as long as the infringement doesn’t cost the owner significant potential profits, the defendant has a good chance to prevail. Attending to that bit of wisdom, common to intellectual property teachers everywhere, would have helped TVEyes with avoiding copyright liability for its innovative project.

If you haven’t heard of TVEyes, you’re probably not in the news, entertainment or public relations businesses. The service isn’t available to individual consumers, and those who don’t need it are unlikely to know of its existence. But if you’ve ever read a sentence like “MSNBC discussed the issue 116 times last week while Fox News didn’t mention it at all,” the chances are somebody’s been browsing TVEyes.

At the heart of the TVEyes model is its text-searchable database of just about everything on television. The company indexes some 1,400 U.S. channels and several hundred more abroad, 24 hours a day. If you want to find out how many times your product was mentioned in the first three days of February, and whether the context was positive or negative, TVEyes is where you go to find out.

The database is compiled mainly by using closed captioning from the channels themselves. Voice-to-text software fills in the gaps. The client searches the database and, upon finding the selected word or phrase, can watch 10-minute clips from each program that mentioned the word. 1

The 2nd Circuit case was largely about those clips. The trial court had already enjoined TVEyes from offering a feature that allowed clients to download 10-minute clips to their own computers. The question before the court of appeals was whether allowing clients to watch the clips while logged in to the TVEyes server infringed the copyright of the broadcaster.

The district judge had agreed with TVEyes that viewing of this sort constituted a fair use, a term used in the Copyright Act to permit copying from a work in a limited set of circumstances. 2  Before the 2nd Circuit, a number of groups that press for online free speech took the side of TVEyes. But the panel ruled unanimously for the plaintiff.

Given the way that fair use is interpreted, TVEyes never stood a chance. Here’s why: As I mentioned at the outset, the factor the courts consider most important is how the use that is claimed to be fair affects the market for the copyrighted work. This includes profits from potential markets that the copyright owner has not yet entered. TVEyes could have sought a license from broadcasters to replay those 10-minute clips. It didn’t.

Now, in a sense this is paradoxical. TVEyes found a way to use copyrighted materials to create a service the market wasn’t providing (a transformative use, in the jargon). Broadcasters either hadn’t thought of the idea or (more likely) hadn’t thought it worth pursuing. We might even say that TVEyes risked its own capital to provide proof of concept in a business that risk-averse broadcasters had avoided. Now the company is being punished for showing that the broadcasters guessed wrong.

But if we’re going to have a law of copyright, this sort of thing is going to happen. Back in 1896, American Mutoscope Co. brought out a 45-second film depicting a famous scene from the novel and stage play “Trilby” by George Du Maurier. It’s unlikely that Du Maurier was thinking about a movie adaption when he published the book a year earlier. In the brand-new business of film, American Mutoscope might well have been first to prove the concept of book-to-film adaptations. That doesn’t mean the company wouldn’t have owed the novelist any money. 3

Still, the 2nd Circuit barred only the part of the TVEyes model that allows clients to watch the clips. The company will still be allowed to compile its text-searchable database of television and radio broadcasts. And the searchable database, not the instant viewing of the clips, is the company’s big idea.

One might reply that the client’s ability to immediately watch the clips compiled from the database is crucial to the model. If that’s true, then TVEyes will continue to offer the service, but will divert a part of its revenue to paying license fees to broadcasters. This doesn’t seem an insuperable challenge. Negotiation might result in a blanket license, under which TVEyes will set aside a portion of its revenue, which will then be allocated among broadcasters depending on how many clips from each are downloaded. And if, say, station WZMN 4  refuses to join the consortium, the chances are that its clips won’t be included at all. 5

Decisions like TVEyes are often derided as stops along the broadcast model’s spiraling path toward decline. Many will argue, moreover, that the 2nd Circuit has erected a barricade in the path of technological advance. But it’s the Copyright Act not the court that’s blocking the road, and companies have an easy way around. All they’re required to do is share their profits with the creators of the content they seek to exploit.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
  1. TVEyes includes a feature that prevents clients from watching consecutive 10-minute clips of the same show, to avoid in effect a free download of an entire program. According to the 2nd Circuit, the feature was added after the lawsuit was filed. As the court drolly puts it, “The parties dispute whether this measure is effective.”

  2. For a simple explanation of fair use, see here. For a library of judicial rulings on what constitutes fair use, see here.

  3. One might object that a 45-second film shouldn’t infringe. That argument would make a great deal of sense today, when films of two hours or more are the norm. In the late 19th century, however, when movies were a new invention, only shorts were being made.

  4. Per the Federal Communications Commission, WZMN is one of the few currently available call signs.

  5. The decision in the TVEyes case arguably represents a partial retreat from the 2nd Circuit’s landmark 2015 ruling in Authors Guild Inc. v. Google Inc., which allowed Google to build its text-searchable database of books, and then to allow users to view some of the pages of a particular book on which the words or phrases they seek are displayed. The TVEyes panel conceded that the cases are hard to distinguish. I think the readiest distinction is that clips of television broadcasts are considered more valuable than images of pages from books. I believe the balance should be struck the other way around, but I do understand that the market says otherwise.

To contact the author of this story:
Stephen L. Carter at scarter01@bloomberg.net

To contact the editor responsible for this story:
Stacey Shick at sshick@bloomberg.net

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE
Comments