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Fox News Network, LLC v. TVEyes, Inc.

United States District Court, S.D. New York

September 9, 2014

FOX NEWS NETWORK, LLC, Plaintiff,
v.
TVEYES, INC., Defendant

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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September 9, 2014, Filed

For Fox News Network, LLC, Plaintiff: Dale Margaret Cendali, LEAD ATTORNEY, Brian Leary, Felicity Sloan Kohn, Johanna Schmitt, Joshua Levicoff Simmons, Kirkland & Ellis LLP (NYC), New York, NY.

For TVEyes Inc., Defendant: Andrew H. Schapiro, LEAD ATTORNEY, Quinn Emanuel Urquhart & Sullivan, New York, NY; Jessica Anne Rose, Quinn Emanuel Urquhart & Sullivan LLP, New York, NY; Todd Steven Anten, Quinn Emanuel, New York, NY.

ALVIN K. HELLERSTEIN, United States District Judge.

OPINION

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ORDER AND OPINION DENYING IN PART AND GRANTING IN PART CROSS MOTIONS FOR SUMMARY JUDGMENT

ALVIN K. HELLERSTEIN, U.S.D.J.:

TVEyes, Inc. (" TVEyes" ) monitors and records all content broadcast by more than 1,400 television and radio stations twenty-four hours per day, seven days per week, and transforms the content into a searchable database for its subscribers. Subscribers, by use of search terms, can then determine when, where, and how those search terms have been used, and obtain transcripts and video clips of the portions of the television show that used the search term. TVEyes serves a world that is as much interested in what the television commentators say, as in the news they report.

Fox News Network, LLC (" Fox News" ) filed this lawsuit to enjoin TVEyes from copying and distributing clips of Fox News programs, and for damages, and bases its lawsuit on the Copyright Act, 17 U.S.C. § 101 et seq., and the New York law of unfair competition and misappropriation. TVEyes asserts the affirmative defense of fair use. 17 U.S.C. § 107. Both parties have moved for summary judgment.

For the reasons stated in this opinion, I find that TVEyes' use of Fox News' content is fair use, with exceptions noted in the discussion raising certain questions of fact. Fox News' request for an injunction is denied.[1]

I. Factual Background

A. TVEyes

TVEyes is a media-monitoring service that enables its subscribers to track when keywords or phrases of interest are uttered on the television or radio. To do this, TVEyes records the content of more than 1,400 television and radio stations, twenty-four hours a day, seven days a week. Using closed captions and speech-to-text technology, TVEyes records the entire content of television and radio broadcasts and creates a searchable database of that content. The database, with services running from it, is the cornerstone of the service TVEyes provides to its subscribers.

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The database allows its subscribers, who include the United States Army, the White House, numerous members of the United States Congress, and local and state police departments, to track the news coverage of particular events. For example, police departments use TVEyes to track television coverage of public safety messages across different stations and locations, and to adjust outreach efforts accordingly. Without a service like TVEyes, the only way for the police department to know how every station is constantly reporting the situation would be to have an individual watch every station that broadcast news for twenty-four hours a day taking notes on each station's simultaneous coverage.

An Internet search of a recent amber alert for a missing child, for example, would not yield the same results as would a TVEyes search result, because using the internet search results would provide only the segments of content that the television networks made available to the Internet. TVEyes' search results, in contrast, will index, organize, and present what was said on each of the 1,400 stations about the amber alert reliably and authoritatively. Without TVEyes, the police department could not monitor the coverage of the event in order to ensure that the news coverage is factually correct and that the public is correctly informed.

Upon logging into its TVEyes account, the subscriber is taken to the Watch List Page. This page monitors all of the subscriber's desired keywords and terms, and organizes search results by day, tabulating the total number of times the keyword was mentioned by all 1,400 television and radio stations each day over a 32 day period. While on the Watch List Page, a user can also run a " Google News" search, comparing the mentions of the keyword or term on the internet with the mentions of the keyword or term on the TVEyes database. A subscriber can also create a custom time range to tabulate the number of times a term has been used in a certain time period, and the relative frequency of such use compared to other terms. Subscribers can set up email alerts for specific keywords or terms, and receive responses one to five minutes after the keyword or term is mentioned on any of the 1,400 television and radio stations TVEyes monitors. TVEyes' responses to subscribers provides a thumbnail image of the show, a snippet of transcript, and a short video clip beginning 14 seconds before the word was used.

When a subscriber on the Watch List Page clicks on the hyperlink showing the number of times the term was mentioned on a particular day, the subscriber is brought to the Results List Page. The Results List Page displays each mention of the keyword or term in reverse chronological order. Each individual result includes a portion of transcript highlighting the keyword and a thumbnail image of the particular show that used the term. When the user clicks the thumbnail image of the show, the video clip begins to play automatically alongside the transcript on the Transcript Page, beginning 14 seconds before the keyword is mentioned.

The Transcript Page shows users the following information: the title of the program; the precise date and time of the clip; a transcript of the video; the name and location of the channel; market viewership of the clip according to the Nielsen Ratings data; the publicity value of the clip according to data from the television research company, SQAD; and a web address to the website for the channel that features the program or for the program itself if such a web address exists.

TVEyes also provides website pages that organize and present the relevant data graphically and pictorially. The Media Stats page organizes data associated

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with the watch term, providing a graphic showing the number of times the term has been mentioned over a given time period. The Marketshare page displays a " heatmap" graphic that shows the geographic locations where the term is most used, and the frequency of the mentions. The Broadcast Network page generates a pie chart depicting the breakdown of broadcast stations on which the watch term was used. TVEyes also features a Power Search tool that allows users to run ad-hoc keyword search queries; clicking the thumbnail image will bring the user to the clip's corresponding transcript page. Subscribers also can organize searches according to dates and times, by broadcast. The " Date and Time Search" feature enables subscribers to play a video clip starting at a specific time and date on a specific television station, rather than entering a search term.

Subscribers can save, archive, edit, and download to their personal computers an unlimited number of clips generated by their searches. The clips, however, are limited to ten minutes, and a majority of the clips are shorter than two minutes. TVEyes enables subscribers to email the clip from its website to anyone, whether or not a TVEyes subscriber. If the user has downloaded the particular clip, the user can share the clip, or a link to it, on any and all social media platforms and by email. When a recipient clicks on the hyperlink, the viewer is directed to TVEyes' website, not to the content owner's website, and can watch the video content in high-definition. Unless saved or downloaded, the clip's availability is limited to the 32-day term that the clip will remain on the website from the time the clip first appeared on television. Thus TVEyes facilitates publicity activities by subscribers publicizing the content that TVEyes has captured from the broadcasts of television and radio stations, both copyrighted and non-copyrighted contents.

TVEyes is available only to businesses and not to the general public. As of October 2013, TVEyes had over 2,200 subscribers including the White House, 100 current members of Congress, the Department of Defense, the United States House Committee on the Budget, the Associated Press, MSNBC, Reuters, the United States Army and Marines, the American Red Cross, AARP, Bloomberg, Cantor Fitzgerald, Goldman Sachs, ABC Television Group, CBS Television Network, the Association of Trial Lawyers, and many others.[2]

All TVEyes subscribers are required to sign a contractual limitation in a User Agreement, limiting use of downloaded clips to internal purposes. Whenever a subscriber seeks to download clips, TVEyes' website gives notice that such material may be used only for internal review, analysis, or research. Any reproduction, publication, rebroadcasting, public showing or public display is forbidden. TVEyes' email communications with subscribers contain similar warnings. When TVEyes users ask how to obtain rights to publicly post or disseminate clips, TVEyes refers such inquiries to the broadcaster. TVEyes recently added a feature that will block a user from trying to play more than 25 minutes of sequential content from a single station.

TVEyes is a for-profit company with revenue of more than $8 million in 2013. Subscribers pay a monthly fee of $500, much more than the cost of watching cable television. TVEyes advertises in its marketing materials that its users can " watch

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live TV, 24/7; " " monitor Breaking News; " and " download unlimited clips" of television programming in high definition. It also highlights that subscribers can play unlimited clips from television broadcasts, " email unlimited clips to unlimited recipients" and " post an unlimited number of clips" to social media and enjoy " unlimited storage [of clips] on TVEyes servers," and therefore is better " than the traditional clipping services." TVEyes also advertises that subscribers can edit unlimited radio and television clips and download edited clips to their hard drive or to a compact disk. The TVEyes User Manual states that its Media Snapshot feature " allows you to watch live-streams of everything we are recording. This is great for Crisis Communications, monitoring Breaking News, as well as for Press Conferences." Fox News draws specific attention to such live-streaming of its programs by TVEyes in its claim of copyright infringement.

B. Fox News

Fox News is an international television news organization headquartered in New York. Fox News owns and operates two television news channels: Fox News Channel (" FNC" ) and Fox Business Network (" FBN" ). FNC delivers breaking news in a twenty-four hour news cycle on all matters of interest, including political and business news, and has been the most watched news channel in the United States for the last eleven years. FBN is a financial news channel that provides real-time information and reports on financial and business news. FBN is distributed to over 70 million cable subscribers across the United States. Both FNC and FBN air news and information twenty-four hours a day, seven days a week. Their primary competitors are the cable television channels, MSNBC and CNN.

FNC and FBN are in the business of reporting news worldwide, and incur significant expenditures to cover developing news stories of the day, every day. Their programs reflect creative endeavors, and considerable time, effort, and expense in delivering news and political commentary to the public. The news ticker passing horizontally at the bottom of the television screen provides real-time updates of breaking news while regular programming airs.

Fox News also has a growing online and digital presence on the Internet (as do its competitors, MSNBC and CNN). Fox News makes live streams of FNC and FBN programming available on the internet through its TV Everywhere service, to viewers having a cable or satellite subscription. Fox News also makes certain segments of its shows available to the general public on its websites, FoxNews.com and FoxBusiness.com. Fox News makes about 16% of its television broadcast content available online, and is concerned that a broader dissemination beyond that will result in a weakening of its viewer-base or create a substitute for viewing Fox News on television cable and satellite. Fox News provides clips of segments of its programs within an hour of airing, and with updates as needed. The video clips do not show the exact content or images that were aired on television -- the news ticker on the bottom of the screen is absent in the online clips, for example. Furthermore, the online clips sometimes feature " corrected" versions of news stories, amending and correcting incorrect and outdated descriptions in the original television version.

Visitors to Fox News' websites are shown a pre-reel advertisement, before watching news clips, a feature that generates revenue for Fox News. Visitors to Fox News' websites can also copy and

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paste URLs of specific clips to share on social media platforms. Fox News also allows website visitors to search the video clip content on its website, and provide keywords for that purpose. Fox News restricts the use of the video clips provided on the websites, requiring that they are to be used for " personal use only and [the content] may not be used for commercial purposes." Visitors to Fox News' websites are not permitted to download any of the video clips.

Fox News licenses third party websites, including Yahoo!, Hulu, and YouTube, to store and show video clips of segments of its program on their websites, thereby generating another stream of income by the license fees Fox News charges. Fox News licensees must covenant that they will not show the clips in a way that is derogatory or critical of Fox News. In the past three years, Fox News has made approximately $1 million in revenue from licensing content to these third party websites.

Fox News also distributes video clips through its exclusive clip-licensing agent, ITN Source, Ltd. (" ITN Source" ). ITN Source distributes and licenses video clips of Fox News' content to companies and governmental organizations for use in a variety of ways, including to post on a website or social media platform or to create a digital archive. ITN Source maintains a library of over 80,000 Fox News video clips which its customers can search using keywords. Overall, Fox News has made approximately $2 million in licensing fees through ITN Source. ITN Source's partner, Executive Interviews, Ltd. (" Executive Interviews" ) also distributes Fox News' content by marketing copies of video clips to guests who have appeared on Fox News' channels. Executive Interviews' clients include multinational corporations, small boutique and regional companies, nonprofit organizations, and government entities.

The vast majority of Fox News' revenues is derived from fees paid to Fox News by cable companies that broadcast Fox News' content. Unlike broadcast television which is aired free of charge, FNC and FBN, as cable television stations, charge fees to cable providers like, for example, Time Warner Cable, and they, in turn, charge fees for use of cable to their subscribers. Time Warner Cable and other cable and satellite providers pay Fox News per-subscriber carriage fees -- the more subscribers, the bigger the carriage fee. Fees and advertising revenues from commercial advertisers and sponsors vary directly with the Nielsen Ratings of the total number of viewers, and similar ratings of traffic on Fox News websites.

Fox News filed this lawsuit because of concern that TVEyes will divert viewers of its news and commentary programs and visits to its websites. Fox News sues TVEyes for violations of the Copyright Act, 17 U.S.C. § 101 et seq., and under state law for misappropriation. Fox News also alleges that TVEyes' use of Fox News' video content to create video clips that TVEyes' subscribers can play, save, edit, archive, download, and share constitute copyright infringement. Specifically, Fox News alleges that TVEyes copied and infringed 19 hour-long programs aired on FNC and FBN between October 16, 2012 and July 3, 2013 aired on FNC and FBN.[3]

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Fox News owns copyright registrations for the nineteen hour-long shows. TVEyes asserts that its use of Fox News' content is a " fair use" protected by the Copyright Act. See, 17 U.S.C. ยง 107. The ...


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