A big week in copyright, Kirtsaeng, isoHunt, and Associated Press v Meltwater

March 25th, 2013 by Barry Sookman Leave a reply »

Last week was a very eventful one in copyright law with three significant copyright rulings from US courts. The US Supreme Court ruled that importing genuine grey market works into the US does not infringe copyright. The Ninth Circuit affirmed a ruling that the Canadian bitTorrent site isoHunt is liable for contributory copyright infringement. Last, a US District Court ruled that Meltwater’s controversial electronic news clipping service is liable for copyright infringement and is not protected by fair use doctrine.

In Kirtsaeng v John Wilely & Sons, Inc. 568 U.S. ___ (2013), the US Supreme Court finally resolved a split among the Circuit Courts of appeals by deciding that the “first sale” doctrine applies to protect a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured outside the US. In particular, it ruled that a buyer can bring that copy into the United States (and sell it or give it away) without obtaining permission to do so from the copyright owner. The Court’s decision was summed up as follows:

In our view, §109(a)’s language, its context, and the common-law history of the “first sale” doctrine, taken together, favor a non-geographical interpretation. We also doubt that Congress would have intended to create the practical copyright-related harms with which a geographical interpretation would threaten ordinary scholarly, artistic, commercial, and consumer activities…We consequently conclude that Kirtsaeng’s nongeographical reading is the better reading of the Act.

The Ninth Circuit made several important findings in ruling that isoHunt, one of the most popular pirate file sharing sites, is liable for copyright infringement in Columbia Pictures Industries, Inc. v. Fung, (NO. 10-55946), WL 1174151, (9th.Cir.March 21, 2013). First, it confirmed the holdings of many courts that users of file sharing services are liable as direct infringers for uploading and downloading copyright content such as the motion pictures in issue. Second, isoHunt’s substantial encouragement and enablement of infringements rendered it liable for inducing infringement. Third, none of the DMCA safe harbor applied to protect isoHunt. Importantly, isoHunt could not rely on several of the safe harbors because it had “red flag” knowledge of infringement.

Associated Press v. Meltwater U.S. Holdings, Inc., (NO. 12 CIV. 1087 DLC), 2013 WL 1153979, (S.D.N.Y., March 21, 2013) addressed two important copyright doctrines in the course of ruling that Meltwater’s news clipping services infringed copyright. The case was brought by Associated Press which claimed that the storage and indexing of copies of AP news articles which were publically available on the Internet and the provision of copies of extracts of the articles infringed copyright. Meltwater claimed that its service was similar to what search engines do and that such services can carry on legally as a fair use and because the publisher of articles impliedly consents to their  reproduction.

The Court rejected the fair use defense finding all four of the fair dealing factors militated against a finding of fair use. The Court summarized its ruling as follows:

Examining the four factors individually, and considering them as a whole in light of the purposes of the Copyright Act and the fair use defense, Meltwater has failed to raise a material question of fact to support its fair use defense.

Meltwater’s business model relies on the systematic copying of protected expression and the sale of collections of those copies in reports that compete directly with the copyright owner and that owner’s licensees and that deprive that owner of a stream of income to which it is entitled. Meltwater’s News Reports gather and deliver news coverage to its subscribers. It is a classic news clipping service. This is not a transformative use. As significantly, the rejection of the fair use defense here will further the ultimate aim of the Copyright Act, which is to stimulate the creation of useful works for the public good. Harper & Row, 471 U.S. at 558.

Throughout its discussion of the fair use defense, Meltwater has attempted to escape the straight forward application of the four-part fair use test by characterizing itself as a search engine. Meltwater has failed to show, however, that its interactions with its subscribers are equivalent in any material way to the functioning of search engines, as that term is commonly understood.

Exploitation of search engine technology to gather content does not answer the question of whether the business itself functions as a search engine. In any event, however Meltwater’s business is classified, it must still show that its use of copyrighted expressive content was a fair use. This it has not done.

Meltwater’s implied license defense was premised on the argument it had the right to copy AP’s content because the sites that had made the content available under license from AP did not use the robot.txt protocol to prevent crawling those sites. Essentially, it contended that unless a rights holder takes affirmative steps to prevent content posted on the Internet from being copied, that consent to it copying and dissemination must be implied. The Court rejected these arguments stating the following:

For several reasons, the failure of AP’s licensees to employ the robots.txt protocol did not give Meltwater an implied license to copy and publish AP content. First, what Meltwater is suggesting would shift the burden to the copyright holder to prevent unauthorized use instead of placing the burden on the infringing party to show it had properly taken and used content.

As significantly, there is no fair inference, based simply on the absence of the robots.txt protocol, that there has been a meeting of the minds between the copyright owner and the owner of the web crawler about the extent of copying. The implied license that Meltwater is advocating would reach to every web crawler with no distinction between those who make fair use and those who do not, or between those whose uses may be publicly observed and those whose uses are hidden within closed, subscriber systems. Meltwater has presented no evidence to suggest that robots.txt instructions are capable of communicating which types of use the copyright holder is permitting the web crawler to make of the content or the extent of the copying the copyright holder will allow…

There is yet another policy reason against the use of robots.txt protocol to enforce the Copyright Act. The protocol is a helpful innovation that gives instructions to cooperating crawlers. But, in the interest of openness on the Internet, one would expect it to be used only when it is in the clear interest of the website to broadly limit access. It is fair to assume that most Internet users (and many owners of websites) would like crawlers employed by search engines to visit as many websites as possible, to include those websites in their search results, and thereby to direct viewers to a vast array of sites.

Adopting Meltwater’s position would require websites concerned about improper copying to signal crawlers that they are not welcome.

Meltwater’s service was also found liable for infringement in the UK.

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