Copyright

In a significant ruling on March 27, 2018, the Court Appeals for the Federal Circuit ruled that Google's copying of 11,500 lines of code from the Java programming language was not fair use.[ref]Oracle America, Inc. v. Google, LLC 2108 WL 1473875 Court of Appeals for the Federal Circuit 2018[/ref] Plaintiff Oracle America, the owner of Java, originally was seeking $8.8 billion dollars in damages, though they are now expected to ask for more than that.[ref]Google Could Owe Oracle $8.8 Billion in Android Fight-Patent, Trademark & Copyright Journal - Daily Edition (BNA) Bloomberg Law[/ref] The Court has remanded the case back to the District Court in California for a trial on damages.[ref]Oracle America, Inc. v. Google, LLC at 6 (pagination references are to the original opinion)[/ref] The dispute arises out of one of Google's most frequent tactics: take what you want without permission, and duke it out in Court later.[ref]Id. at 10[/ref] Google initially approached Oracle about a license to use the Java programming language in software it was developing for its smartphone. It had acquired Android, Inc. as a first step to doing so.[ref]Id.[/ref] It wanted to use the widely available Java as a means for third parties to write apps for the new operating system.[ref]Id.[/ref] Google had been unsuccessful in writing the "application programming interface" and thus needed to use Java's APIs.[ref]Id.[/ref] When negotiations stalled, Google simply copied the code anyway,[ref]Id.[/ref] and released the Android operating system in 2007. Google insured the wide adoption of its (slightly purloined) operating system by giving it away for free to mobile device manufacturers.[ref]Id.[/ref] The effect on Oracle was immediate and severe. There was a massive switch away from using the Java platform, and those that did stay with Java demanded steep discounts.[ref]Id.[/ref] Oracle filed suit in 2010. Since that time, the case has literally bounced around the Court system for the next 8 years, with sudden reversals of fortune for each side. The first trial ended in a finding of infringement against Google. The trial Judge reversed that ruling, holding that the APIs were not copyrightable. In the appeal, the Federal Circuit then reversed that ruling, saying that the APIs were copyrightable. Google filed a petition for certiorari with the Supreme Court, who in response asked for an advisory opinion from the Solicitor General. The Solicitor General agreed that the APIs were copyrightable, leading to the Supreme Court denying the petition. The case then headed back to California to determine whether Google's copying was (all together now) fair use. The jury did return a finding of fair use. In the inevitable appeal that followed, the case wound up back before the Court of Appeals for the Federal Circuit, who now ruled the copying not to be fair use as a matter of law, and sent the case back to California for a trial on damages.[ref]Id. at 6-7[/ref] If you are wondering (as did I) how a copyright case wound up at the Court of Appeals for the Federal Circuit, it is because Oracle's case originally contained a patent claim in addition to the copyright claim. Even though the patent claim has since been removed from the case, its original presence means the appeal goes to the Federal Circuit, which has exclusive jurisdiction over patent appeals.[ref]Id. at 15[/ref] Even though the Federal Circuit is obliged to follow 9^th Circuit precedent, Google probably feels that they would have gotten a different result in their "home court." Google apologist, the Electronic Frontier Foundation, makes no bones about this point, whining that the Federal Circuit was a playing field slanted in favor of the Plaintiff.[ref]Federal Circuit Continues to Screw Up Copyright Law and Thwart Innovation[/ref] Since this is a fair use case, and we've got Google as a defendant, it's not hard to guess how Google is going to defend its verbatim copying: (all together now) it's "transformative." The Court spends 9 pages addressing Google's argument, so there can be no complaint that every point was not seriously considered. Yet, in the final analysis, Google loses every single point. "Google's use of the API packages is not transformative as a matter of law because: (1) it does not fit within the uses listed in the preamble to § 107; (2) the purpose of the API packages in Android is the same as the purpose of the packages in the Java platform; (3) Google made no alteration to the expressive content or message of the copyrighted material; and (4) smartphones were not a new context."[ref]Oracle America, Inc. v. Google, LLC at 33[/ref] "Google's primary argument on appeal is that Android is transformative because Google incorporated the declarations and SSO of the 37 API packages into a new context—smartphones. But the record showed that Java SE APIs were in smartphones before Android entered the market. Specifically, Oracle presented evidence that Java SE was in SavaJe mobile phones and that Oracle licensed Java SE to other smartphone manufacturers, including Danger and Nokia. Because the Java SE was already being used in smartphones, Google did not ‘transform' the copyrighted material into a new context and no reasonable jury could conclude otherwise."[ref]Id. at 36-37[/ref] It is reassuring that a Court finally looks to the wording of Section 107 guidance. The primary reason for fair use is to promote criticism, commentary, news reporting and the like. Too often, fair use is stretched to absurd lengths to justify the result the Court wishes.[ref]Has This Court Decision Rendered the Creative Commons License Unenforceable?[/ref] The whole argument that an exact copy merely placed into a different setting, somehow "transforms" does not hold true to the purposes of fair use of promoting criticism, commentary and news reporting. But the most absurd argument put forth by Google was the assertion that because it gave away the Android operating system for free, and its revenue was from advertising, that this made it a non-commercial use.[ref]Oracle America, Inc. v. Google, LLC at 29[/ref] Under this loopy theory, every pirate website in the world could not be held liable for copyright infringement for allowing users to download pirated works for free. Of course Google, and its apologist the EFF, would love for this to be true, but the Court rules decisively this is not the case. "First, the fact that Android is free of charge does not make Google's use of the Java API packages noncommercial. Giving customers ‘for free something they would ordinarily have to buy' can constitute commercial use (citation omitted)… [T]he question ‘is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.'(citation omitted)… [T]o the extent we must assume the jury found Google's use of the API packages to be anything other than overwhelmingly commercial, that conclusion finds no substantial evidentiary support in the record. Accordingly, Google's commercial use of the API packages weighs against a finding of fair use."[ref]Id. at 29-30[/ref] If the use is commercial, and non-transformative, this is a big strike against Google, because, as we have seen time and time again, Courts tend to let the "transformative" label turn into a trump card. The Court then turns to the second factor: the nature of the work used. There was conflicting testimony as to whether the APIs were more functional or artistic. The Court held that a reasonable jury had sufficient evidence to determine that the nature was primarily functional, and that this would tend to favor a finding of fair use.[ref]Id. at 44[/ref] The third factor, the amount and substantiality of the taking, winds up being ruled neutral to perhaps weighing against fair use.[ref]Id. at 48[/ref] The amount copied by Google was 11,500 lines of code. The Java SE platform has 2.86 million lines of code. So, it would seem that the portion used is very small. The problem is that only 170 lines of code were necessary to write in the Java language. Google copied 11,500 lines, or 11,300 lines more than were necessary.[ref]Id. at 46[/ref] "Google sought ‘to capitalize on the fact that software developers were already trained and experienced in using the Java API packages at issue.' (citation omitted) But there is no inherent right to copy in order to capitalize on the popularity of the copyrighted work or to meet the expectations of intended customers. Taking those aspects of the copyrighted material that were familiar to software developers to create a similar work designed to be popular with those same developers is not fair use." (emphasis added)[ref]Id. at 47[/ref] As to the fourth factor, market harm, the Court found plenty of evidence of harm to Oracle. "Specifically, the jury heard testimony that Java SE was already in smartphones, including Blackberry, SavaJe, Danger, and Nokia. That Android competed directly with Java SE in the market for mobile devices is sufficient to undercut Google's market harm arguments. With respect to tablets, the evidence showed that Oracle licensed Java SE for the Amazon Kindle. After Android's release, however, Amazon was faced with two competing options—Java SE and Android—and selected Android. The jury also heard evidence that Amazon later used the fact that Android was free to negotiate a steep discount to use Java SE in its newer e-reader. In other words, the record contained substantial evidence that Android was used as a substitute for Java SE and had a direct market impact. Given this evidence of actual market harm, no reasonable jury could have concluded that there was no market harm to Oracle from Google's copying."[ref]Id.[/ref] "Android's release effectively replaced Java SE as the supplier of Oracle's copyrighted works and prevented Oracle from participating in developing markets. This superseding use is inherently unfair."[ref]Id. at 54[/ref] But what was probably the killer nail in the coffin for Google, was its admission that it could have written its own APIs for Android, but was having problems, so it resorted to copying Oracle APIs.[ref]Id. at 9 and at 27[/ref] "Google could have furthered copyright's goals of promoting creative expression and innovation by developing its own APIs, or by licensing Oracle's APIs for use in developing a new platform, it chose to copy Oracle's creative efforts instead. There is nothing fair about taking a copyrighted work verbatim and using it for the same purpose and function as the original in a competing platform."[ref]Id. at 54[/ref] (emphasis added) Again, we need to kill once and for all the idea that people cannot create unless they are able to copy what someone else has done. As the EFF whines "the Ninth Circuit generally protects innovation by recognizing that copying of a functional work, like an API, is often necessary and appropriate in order to make something new."[ref]Federal Circuit Continues to Screw Up Copyright Law and Thwart Innovation[/ref] How in the world is something "new" when you copied it from someone else? Copying is not creativity![ref]Copying Is Not Creativity! Why Creative Artists Don't Need the Public Domain[/ref] What now? A second petition to the Supreme Court is a foregone conclusion. Whether the Court would choose to hear it is anybody's guess. It might be a good opportunity to reign back in the mess that is transformative use. But barring that, the case will return to California for a trial on damages. I'm sure Oracle will have plenty of evidence as to their lost licensing revenue for Java, and on the other side there's the fact that Google realized $42 billion dollars in revenue from advertising on Android.[ref]Oracle America, Inc. v. Google, LLC at 10[/ref] Oracle has found the droids they were looking for. And it's going to get very expensive for Google.

If you are are involved in the real estate business, (or even if you're not, because it's such a well-known cliché) the three most important things that govern the value of a particular piece of property are "location, location and location." In dealing with copyright in the modern internet era, this has also become true. Websites (who more often than not are doing something they shouldn't) claim to be exempt from liability for copyright infringement because of the "location" of the infringing files. They promote a theory that since the infringing files are located "there" and not "here," that they have no liability for copyright infringement. Indeed, this is the entire argument of notorious sites like The Pirate Bay, backed by the usual suspects of infringement apologists like Public Knowledge and the Electronic Frontier Foundation,[ref]Federal Judge Says Embedding a Tweet Can Be Copyright Infringement[/ref] who maintain the idea comes from "years of settled precedent."[ref]Id.[/ref] Guess what? It's not settled precedent at all. This is what is known as the "Server Test," and originates with the 9^th Circuit Court of Appeals. In the case of Perfect 10 v. Google,[ref]508 F.3d 1146 (9^th Cir. 2007)[/ref] they ruled that liability for direct copyright infringement depended upon whether the infringing images were stored on the defendant's server (in this case, Google) or was simply imbedded or linked from a 3^rd party server. If it was the latter, there was no direct infringement by Google. However, this ruling has failed to be followed by other District Courts around the country. In a thoroughly researched opinion, the District Court for the Southern District of New York in the closely watched case of Goldman v. Breitbart News Network,[ref]2018 WL 911340 District Court for the Southern District of New York 2018[/ref] recently found that "[f]our courts in this district have discussed the Server Test and Perfect 10's holding; none have adopted the Server Test for the display right."[ref]2018 WL 911340 at 5[/ref] After an intensive survey of those cases that have squarely addressed the display right issue, the Court concludes: "this Court is aware of only three decisions outside of the Ninth Circuit considering the display right in light of Perfect 10; one from the Seventh Circuit which adopted the Server Test for contributory liability, one from the Southern District which stated as a factual matter only that Perfect 10 existed, and one from the Northern District of Texas rejecting Perfect 10."[ref]Id. at 6[/ref] "Years of settled precedent?" Hardly. In the span of about six weeks, we have received four opinions, three in the United States and one in Germany, where three out of the four cases hold "it's not where the copy is stored, it is where the damage occurs that matters." First up is the case from Germany of S. Fischer Verlag Gmbh v. Project Gutenburg Literary Archive.[ref]S. Fischer Verlag GmbH vs. Project Gutenberg Literary Archive Foundation[/ref] (N.B. endnote contains a link to an English Translation). The facts are simple and undisputed. Project Gutenberg is a not-for-profit internet archive that makes digital copies of public domain works available for download. Its website states: "This eBook is for the use of anyone anywhere at no cost with almost no restrictions whatsoever. You may copy it, give it away or re-use it under the terms of the Project Gutenberg License included with this eBook or online at www.gutenberg.org."[ref]S. Fischer Verlag Gmbh v. Project Gutenburg at 4 (emphasis added)[/ref] Problem is, PG only checks to see if the book is in the public domain in the United States. It conveniently leaves it up to the downloader to determine if the work is protected by copyright in the country of the downloader.[ref]Id. at 5[/ref] It turns out that PG was delivering into Germany, books in German, by German authors where the books were in the public domain in the United States, but not in Germany. A German publisher of some of these works made contact with PG to get these items removed. The response by PG can be best characterized as lackadaisical and indifferent, ultimately resulting in a refusal to remove the works at all.[ref]Id. at 5-6[/ref] The German publishers sued PG in Germany, alleging infringements of 18 works to which they held the copyright. PG defended the suit claiming:

• We don't know who is downloading our works or how often, since we don't keep track.
• Providing this information is just too darn difficult so we shouldn't have to do it.
• We are wholly located within the U.S. so German law does not apply to us.
• We tell users not to download works which are under copyright protection in their country.
• That people download copyright protected works anyway is not our problem.
• Even though part of the website is in German, we are only targeting German speakers in the U.S.
• The requested "geo-blocking" is too easily circumvented, so we shouldn't have to do it at all.[ref]Id. at 8-9[/ref]
• Our lawyers told us it was OK.[ref]Id.[/ref] (seriously)

To which the Court replies:

• Under German law, an offense is committed not only in the place where committed but also in the place where the offense had its effect.[ref]Id. at 9-10[/ref]
• Material which a website makes publically accessible in Germany, and which material is protected under German law, is an unlawful act committed in Germany.[ref]Id. at 10[/ref]
• PG targets German users by having parts of the website in German, offering works by German authors, and explicitly states that the eBook may be used by "anyone, anywhere."[ref]Id.[/ref]
• Alleged lack of proof of actual downloads is not dispositive. Since PG openly targets German users to download infringing works, "infringements are to be expected."[ref]Id. at 19[/ref]

In other words, if you take a rock from your front yard and throw it though your neighbor's window, you can't escape liability by saying, "It's my rock and I can throw it wherever I want. The fact that the rock came from my yard means you have no say over what I do with it. The fact that your window is now shattered is just too bad for you." As to the "advice of counsel" defense, the Court dismisses this rather pointedly: "Insofar as the first defendant pleads that it rejected the plaintiff's claim on the advice of its legal counsel, this is irrelevant.  If  anything,  such  –  potentially  false  –  advice  by  a  legal counsel would only apply to the first defendant's culpability, which is without relevance for the claim  for  injunctive  relief.  Moreover, the defendants have not specified  what  their  legal counsel's advice was in the first place. It is therefore still unclear whether this legal advice even included the investigation of German laws and whether the advice to reject the claims was based on legal or factual considerations."[ref]Id. at 17[/ref] The Court ordered the removal from public availability in Germany all of the 18 specific works complained of, subject to a fine of 250,000 Euros or imprisonment for 6 months, for non-compliance.[ref]Id. at 2[/ref] PG responds by throwing the baby out with the bathwater: it now blocks in Germany all access to the entire PG website, including sub-pages.[ref]Court Order to Block Access from Germany[/ref] Actually, this is more akin to the behavior of a petulant six-year old, who finding his team is losing the ball game, takes his bat and ball and goes home. The very next day, a District Court in California dismissed Playboy Entertainment's suit against Happy Mutants, the operators of a website known as "Boing Boing."[ref]Playboy Entertainment Group Inc. v. Happy Mutants, LLC, et al.[/ref] What happened was that someone uploaded every single Playboy centerfold since 1960 to Imgur, a total of 477 images in all.[ref]Wait, Boing Boing Is Not Clickbait?[/ref] Boing Boing provided a link and encouraged viewers to go there, despite the obvious infringing nature of the images. But alas, Playboy sued Happy Mutants in a California District Court, which is bound by the 9^th Circuit's "Server Test" as explained in Perfect 10. So, since the infringing images were on Imgur's servers not Happy Mutants, the dismissal was inevitable. Playboy has since declined to either appeal the dismissal or file an amended complaint. Sorry, Playboy, but you've just been "server-ed." The very next day after dismissal of Playboy's action in a California District Court, a District Court in the Southern District of New York denied the Defendants' (including Breitbart, Time, Gannet, Boston Globe and a host of others) motion for summary judgement on almost exactly the same facts, and rejects the "Server Test." Here in Goldman v. Breitbart News Network, the Plaintiff took a candid picture of Tom Brady, and uploaded it to Snapchat. Upon doing so, the photo "went ‘viral'—rapidly moving from Snapchat to Reddit to Twitter—and finally, made its way onto the websites of the defendants, who embedded the Tweet alongside articles they wrote about Tom Brady actively helping the Boston Celtics recruit basketball player Kevin Durant."[ref]2018 WL 911340 District Court for the Southern District of New York 2018 at 1[/ref] None of them got a license. "Here, it is undisputed that none of the defendant websites actually downloaded the Photo from Twitter, copied it, and stored it on their own servers. Rather, each defendant website merely embedded the Photo, by including the necessary embed code in their HTML instructions. As a result, all of defendants' websites included articles about the meeting between Tom Brady and the Celtics, with the full-size Photo visible without the user having to click on a hyperlink, or a thumbnail, in order to view the Photo."[ref]Id. at 2[/ref] All of the defendants (of course) invoked the "Server Test" to exempt themselves from liability, claiming as noted above that this was "settled law," despite the fact that, again as noted above, this area of the law is not "settled." In rejecting the "Server Test," the Court took a deep dive into the legislative history surrounding the display right provided by 17 USC 106 (5). The Court holds: "A review of the legislative history reveals that the drafters of the 1976 Amendments intended copyright protection to broadly encompass new, and not yet understood, technologies… Specifically, in considering the display right, Congress cast a very wide net, intending to include ‘[e]ach and every method by which the images ... comprising a ... display are picked up and conveyed,' assuming that they reach the public. (citation omitted) It further noted that ‘‘display' would include the projection of an image on a screen or other surface by any method, the transmission of an image by electronic or other means, and the showing of an image on a cathode ray tube, or similar viewing apparatus connected with any sort of information storage and retrieval system.' (citation omitted) Indeed, an infringement of the display right could occur ‘if the image were transmitted by any method (by closed or open circuit television, for example, or by a computer system) from one place to members of the public elsewhere.' (citation omitted)"[ref]Id. at 3-4[/ref] Put more simply, it doesn't matter where the image is located, what matters is whether the image is being displayed without the consent of the copyright owner. The Court looks to the decision of the Supreme Court in American Broadcasting Cos. v. Aereo Inc.[ref]134 S.Ct 2498 (2104)[/ref] and finds the reasoning of the court applicable to the facts here: "At heart, the Court's holding eschewed the notion that Aereo should be absolved of liability based upon purely technical distinctions…' This difference means nothing to the subscriber. It means nothing to the broadcaster. We do not see how this single difference, invisible to subscriber and broadcaster alike, could transform a system that is for all practical purposes a traditional cable system into a ‘copy shop that provides patrons with a library card.' (citation omitted)… Furthermore, the principles that undergird the Aereo decision—chief among them that mere technical distinctions invisible to the user should not be the lynchpin on which copyright liability lies—apply with equal vigor here."[ref]2018 WL 911340 at 8 citing Aereo at 2507[/ref] Since here, the embedding caused the photo to pop up as if it was in fact stored on the Defendant's server, when it was stored elsewhere, makes the entire "Server Test" a distinction without a difference as to the display right. Plus, the Defendants all took active steps to embed the image in their web pages, the sort of "volitional act" many courts require in order to impose liability. "In Perfect 10, Google's search engine provided a service whereby the user navigated from webpage to webpage, with Google's assistance. This is manifestly not the same as opening up a favorite blog or website to find a full color image awaiting the user, whether he or she asked for it, looked for it, clicked on it, or not. Both the nature of Google Search Engine, as compared to the defendant websites, and the volitional act taken by users of the services, provide a sharp contrast to the facts at hand."[ref]Id. at 9[/ref] The Court goes on to hold that the "Server Test" has no real support in the Copyright Act, and that Perfect 10 is, in fact, wrongly decided. "[T]his Court is skeptical that Perfect 10 correctly interprets the display right of the Copyright Act. As stated above, this Court finds no indication in the text or legislative history of the Act that possessing a copy of an infringing image is a prerequisite to displaying it. The Ninth Circuit's analysis hinged, however, on making a "copy" of the image to be displayed—which copy would be stored on the server. It stated that its holding did not ‘erroneously collapse the display right in section 106(5) into the reproduction right in 106(1).' (citation omitted). But indeed, that appears to be exactly what was done."[ref]Id. at 8 (emphasis added)[/ref] "In sum, the Court here does not apply the Server Test. It is neither appropriate to the specific facts of this case, nor, this Court believes, adequately grounded in the text of the Copyright Act. It therefore does not and should not control the outcome here."[ref]Id. at 9 (emphasis original)[/ref] A little more than two weeks later, the Court of Appeals for the District of Columbia handed down its decision in Spanski Enterprises Inc v. Telewizja Polska S.A.,[ref]Spanski Enterprises, Inc. v. Telewizja Polska, S.A.[/ref] giving more weight to the theory that it's really where the harm occurs that is the most important factor in deciding in copyright disputes. Spanski is the reverse of Project Gutenberg, but the result is ultimately the same. In Spanski, the defendant streamed into the U.S. 51 episodes of Polish language television programs for which Plaintiff held the exclusive North and South American performance rights. The District Court ruled that this was infringement and assessed damages of $60,000 per episode or $3,060,000 in total.[ref]Id. at 2[/ref] On appeal, TV Polska made two arguments that sound vaguely familiar:

• "[M]aintaining a fully automated video-on-demand service cannot constitute a copyright violation because the end user, who ultimately selects which content to view, is alone liable for any infringement."[ref]Id. at 8[/ref]
• "[B]ecause its conduct occurred exclusively in Poland, imposing Copyright Act  liability  on  the  basis  of  that  conduct  would  amount  to an  impermissible  extraterritorial  application  of  the Act."[ref]Id.[/ref]

In other words,

• It's not my fault that by making it easy for infringements to occur, that actual infringements do occur; and
• It's not my fault that your window is damaged, because I threw the rock from my own yard.

The Court of Appeals dispenses with the first point swiftly and decisively: "Nowhere  does  the [Copyright]  Act  state  that  a  work  so  shown  is performed  only  if  a third-party  end  user  plays  no  role  in  the  showing."[ref]Id. at 9[/ref] A closer question is presented as to whether a broadcast that originates abroad can be actionable in the United States, which the Court determines to be a "question of first impression in the federal appellate courts."[ref]Id. at 14[/ref] The Court finds that "multiple district court decisions"[ref]Id. at 20[/ref] have held that a performance that originates abroad but "terminates in the United States constitutes a domestic Copyright Act violation." It rules that to hold otherwise "would leave the door open to widespread infringement, rendering copyright in works capable of online transmission largely nugatory."[ref]Id. at 18[/ref] Good Lord. A blinding light of unapologetic common sense. The Court cites favorably the amicus curiae brief filed by the United States Department of Justice. There, the DoJ writes that if extra-territorially were a ready defense "large scale criminal enterprises could avoid United States copyright liability by simply locating their servers outside the United States."[ref]Brief of the United States at 14[/ref] Gee…isn't this what the EFF tells us every day is, in fact, the law? The court wholeheartedly disagrees. "We agree with the United States that ‘Congress could not have intended the public performance right to be susceptible to such ready evasion.'"[ref]Spanski at 18[/ref] "To sum up, we hold that where a foreign broadcaster uploads copyrighted content to its website and directs that content onto a computer screen in the United States at a user's request, the broadcaster commits an actionable domestic violation of the Copyright Act."[ref]Id. at 24[/ref] To round up these complex issues, Section 512(c) contemplates exemption from liability only if the service provider has "actual knowledge" that the material is infringing or is "not aware of facts and circumstances from which infringing activity is apparent." Having made this determination, it seems logical that it should apply to linking as well. Clearly Boing Boing knew that the Playboy Centerfolds were infringing copies and it actively induced its visitors to go there. As David Newhoff writes in his blog "The Illusion of More:" "A simple way to understand this case is to substitute Playboy's images for child pornography. I know it's an overused example, but that's because there is no confusion that child porn is unlawful in every sense of the word. If Boing Boing were to write a post that said something like, ‘Child pornography is a heinous crime that we would never condone, but reviewing these images provides insight into the minds of pedophiles,' and then they linked to said images, guess what would happen. That's right. They could be held liable for facilitating and promoting access to unlawful material; and I doubt that any court, or many citizens, would be the least bit confused about this because linking to the material is not integral to reporting about it. This is a judgment call that professional journalists make all the time."[ref]A Tale of Two Links: The Goldman & Playboy Opinions (so far)[/ref] Yet, to follow the logic of the "Server Test," it suggests that there should be no liability for doing so. As to the foreign effect of U.S. Copyright law, the blog IPKat makes this point: "[T]he fact that the works have entered the public domain under US law cannot serve as a justification to make them available to the public in other countries, where copyright protection is still in place. If one were to follow the defendants' logic, the legality of making works available to the public worldwide would depend solely on the law of the country in which the person who provided the works had his residency. This would conflict with local laws and the principle of territoriality, and in essence submit all works' copyright duration to the ‘lowest common denominator' of the country with the shortest copyright term. It is easy to conceive a scenario where another ‘Project Gutenberg' would establish its business in countries like Eritrea (where works enter the public domain 50 years after publication) or the (English speaking) Republic of Marshall Islands (where copyright is apparently only available to citizens of the Marshall Islands or works produced there), thus placing almost all contemporary literature in the ‘public domain' under local laws."[ref]Gutenberg.org loses to German publisher and is found liable for damages[/ref] We need to dispense with the idea that the internet is somehow so different that normal concepts of law, including respect for the laws of other countries, do not or should not apply. A stream of commerce that exists globally should expect that it might incur liability globally. And PG's geo-blocking temper tantrum demonstrates a point made time and again by this blog, namely that there exists the technology to keep these internet entities within the law, they just don't want to do it. As to the frequent complaints that such ruling will "break the internet," we've heard this every single time one of these decision goes against the tech interests and their lap dogs, and somehow the internet keeps rolling along. Or maybe causing "a tremendous chilling effect on the core functionally of the web"[ref]2018 WL 911340 at 9[/ref] is a good idea. Again, as David Newhoff writes: "… I actually agree with Boing Boing's defenders that this case gets to the heart of the internet—namely the heart of what sucks about the internet, which is populated by too many opportunistic platforms that do very little other than manipulate users and exploit work somebody else has produced. If WANKs like Boing Boing cannot operate without blanket immunity from responsibility—a dysfunctional policy that real journalists have never enjoyed—then the enterprise should fail."[ref]Wait, Boing Boing Is Not Clickbait?[/ref]

February 26, 2018 saw the commencement of "Fair Use Week."[ref]Columbia University's Copyright Advisory Services Fair Use Contest to win an iPad![/ref] Intentionally or unintentionally, but certainly ironically, the Second Circuit Court of Appeals used this week to release its long awaited opinion in Fox News Network, LLC v. TVEyes, Inc.[ref]Fox News Network, LLC v.TVEyes, Inc  2018 WL 1057178 Second Circuit 2018[/ref] This decision completely rejects the fair use defense of TV video indexer TVEyes. Faithful readers of this blog will recognize the business known as TVEyes. I have written about this service twice before, and in a lengthy post here,[ref]The "Eyes" Don't Quite Have It: Judge Rules Against TV Indexer's Fair Use Defenses[/ref] described the basis of the dispute with Fox News Network and the legal analysis of the fair use claim. Back then I wrote: "TVEyes is a video indexer. It offers, for a fee, searchable segments of television shows. It uses the closed-captioning function to create a searchable database where one can search for how many times, and in what context, certain words and phrases occur in television shows. To this end, it records all of the content on more than 1,400 television and radio stations. One of these stations is the Fox News Network. A subscriber can not only obtain a transcript of the segment of the show selected, he/she can also see a copy of the original video in which the usage occurred. TVEyes is definitely a "for profit" enterprise and has 22,000 subscribers.  It is not available to the general public."[ref]Id.[/ref] The District Court ruled on four specific points as to whether they were fair use:

• Allowing subscribers to "archive" segments on TVEyes' servers indefinitely
• Allowing subscribers to provide links to video content to non-subscribers of TVEyes
• Allowing searches by date and time, rather than keywords
• Allowing subscribers to download to their own computers' video segments free of restrictions

The District Court found that the first bullet point was fair use, but ruled the remaining three were not fair use. Both sides appealed. To say that the TVEyes case was a closely watched case would be an understatement. The following organizations filed or joined in "friend of the Court" briefs.

• Internet Archive
• American Library Association
• Association of College and Research Libraries
• Association of Research Libraries
• Society of American Archivists
• Electronic Frontier Foundation
• Public Knowledge
• Computer & Communications Industry Association
• Media Critics
• Professors of Intellectual Property Law
• National Association of Broadcasters
• Copyright Alliance
• American Photographic Artists
• American Society of Media Photographers
• Digital Media Licensing Association
• National Press Photographers Association
• Professional Photographers of America
• American Society of Journalists and Authors, Inc.
• National Cable & Telecommunications Association
• Cable News Network, Inc.
• Gray Television Group, Inc.
• Hearst Television, Inc.
• ITV America
• Intellectual Property Scholars

Bear in mind that the Court hearing the appeal is the Second Circuit Court of Appeals. This court in the past has constituted the "home court advantage" for anyone seeking to claim fair use on the grounds of "transformative use." The Second Circuit's outrageous decision in Cariou v. Prince[ref]714 F.3d 694 2d Circuit (2013)[/ref] has been widely criticized by commentators, including me,[ref]Marching Bravely Into the Quagmire: The Complete Mess that the "Transformative" Test Has Made of Fair Use[/ref] and for good measure, the Seventh Circuit Court of Appeals.[ref]Kienitz v Sconnie Nation,  766 F.3d 756 Seventh Circuit (2014)[/ref] Surprisingly, the Court sides completely with Fox News, and greatly dials back the expansive interpretation of the Court's own ruling in the Google Books case.[ref]Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir. 2015)[/ref] This leads the Electronic Frontier Foundation to blast the Court's decision with the headline "Second Circuit Gouges TVEyes…," a headline so great I wish I'd thought of it first. But I digress. The Court starts off by acknowledging the 500 pound elephant in the room, the Court's own decision in the Google Books case. "…[W]e cautioned that the [Google Books]case ‘test[ed] the boundaries of fair use.' (citation omitted). We conclude that defendant TVEyes has exceeded those bounds."[ref]Fox News Network, LLC v.TVEyes, Inc  at 7 (All page references are to the original opinion pagination)[/ref] Then it drops the hammer: "TVEyes's re-distribution of Fox's audiovisual content serves a transformative purpose in that it enables TVEyes's clients to isolate from the vast corpus of Fox's content the material that is responsive to their interests, and to access that material in a convenient manner. But because that re-distribution makes available virtually all of Fox's copyrighted audiovisual content—including all of the Fox content that TVEyes's clients wish to see and hear—and because it deprives Fox of revenue that properly belongs to the copyright holder, TVEyes has failed to show that the product it offers to its clients can be justified as a fair use."[ref]Id.[/ref] TVEyes has two basic modes. A "search" function allows the subscriber to find video segments that contain certain buzzwords. The "watch" function allows that same subscriber to view that same segment for up to 10 minutes of video, unaltered from its first performance by Fox News.[ref]Id. at 10[/ref] The District Court ruled that the "search" function was fair use, a ruling I agreed with,[ref]Copyright Blog Update: Court of Appeals Rejects "Transformative Use" Test & Malibu Media Marches Along[/ref] and which Fox News did not challenge on appeal. The problem is with the "watch" function. The Court likens the "view" function to the VCR which was the subject of the Supreme Court's Sony Betamax decision,[ref]Sony Corporation of America vs. Universal City Studios, Inc.464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984)[/ref] effectively allowing the subscriber to "time shift" the Fox News programming. Yet the Court holds this is only "somewhat transformative."[ref]Fox News Network, LLC v.TVEyes, Inc  at 13[/ref] The Court reasons "[t]he Watch function has only a modest transformative character because, notwithstanding the transformative manner in which it delivers content, it essentially republishes that content unaltered from its original form, with no ‘new expression, meaning or message.'"[ref]Id.[/ref] As to the "research as transformative" argument advanced by TVEyes, the Court stated in a footnote: "[I]f copying were deemed transformative "simply because [it was done] in the course of doing research," then "the concept of a ‘transformative' use would be extended beyond recognition."(citation omitted)[ref]Id. at footnote 4[/ref] Then: "The commercial nature of a secondary use weighs against a finding of fair use. (citation moitted) And it does so especially when, as here, the transformative character of the secondary use is modest. (citation omitted) ("[T]he [less] transformative the new work, the [more] will be the significance of other factors, like commercialism...."). The Watch function has only a modest transformative character because, notwithstanding the transformative manner in which it delivers content, it essentially republishes that content unaltered from its original form, with no "new expression, meaning or message."(citation omitted)[ref]Fox News Network, LLC v.TVEyes, Inc  at 13[/ref] Thus, factor one of fair use, the purpose and character of the use, favors TVEyes only slightly. For factor two, TVEyes advanced the argument that since the Fox News reports were "factual" and that facts are not copyrightable, factor two, the nature of the work used, should be held to be in their favor. This argument totally misses the idea/expression distinction that is at the heart of copyright for …umm …200 years. The Court dismisses this argument in two sentences. ""Those who report the news undoubtedly create factual works. It cannot seriously be argued that, for that reason, others may freely copy and re-disseminate news reports." (citation omitted)[ref]Fox News Network, LLC v.TVEyes, Inc  at 14[/ref] The Court holds that factor two does not play a significant role in the fair use analysis.[ref]Id.[/ref] Factor three, the amount and substantiality of the portion used, goes down solidly in favor of Fox News. This is because TVEyes copies not a portion, but all of Fox News' programming and repackages it to its subscribers. "In this respect, the TVEyes Watch function is radically dissimilar to the service at issue in Google Books."[ref]Id.[/ref] Later in the opinion: "TVEyes redistributes Fox's news programming in ten-minute clips, which—given the brevity of the average news segment on a particular topic—likely provide TVEyes's users with all of the Fox programming that they seek and the entirety of the message conveyed by Fox to authorized viewers of the original… TVEyes's use of Fox's content is therefore both ‘extensive' and inclusive of all that is ‘important' from the copyrighted work." (citation omitted)[ref]Fox News Network, LLC v.TVEyes, Inc  at 15[/ref] As to the fourth factor, market effect, the Court also comes down solidly on the side of Fox News. "Since the ability to re-distribute Fox's content in the manner that TVEyes does is clearly of value to TVEyes, it (or a similar service) should be willing to pay Fox for the right to offer the content. By providing Fox's content to TVEyes clients without payment to Fox, TVEyes is in effect depriving Fox of licensing revenues from TVEyes or from similar entities. And Fox itself might wish to exploit the market for such a service rather than license it to others. TVEyes has thus ‘usurp[ed] a market that properly belongs to the copyright-holder.' (citation omitted) It is of no moment that TVEyes allegedly approached Fox for a license but was rebuffed: the failure to strike a deal satisfactory to both parties does not give TVEyes the right to copy Fox's copyrighted material without payment." (emphasis added)[ref]Fox News Network, LLC v.TVEyes, Inc  at 16-17[/ref] When I read that last sentence I thought "at last somebody gets it." We are constantly told that all these new fangled tech gadgets are somehow "different" and thusly normal restrictions on certain activity, such as copyright infringement, do not apply. Copyright infringement is against the law. It does not become legal just because it is accomplished with a computer, over the internet. That the third and fourth factors favor Fox, and the first factor favors TVEyes "only slightly," the result is that TVEyes service is infringing and not fair use.[ref]Fox News Network, LLC v.TVEyes, Inc  at 17-18[/ref] The Court, having determined that the "watch" function is infringing, directs the District Court to re-issue the injunction to prohibit all of the "watch" function, not just some of it.[ref]Fox News Network, LLC v.TVEyes, Inc  at 19[/ref] The criticism of the decision hinges on what fair use might be made of the clips by third parties. For its part, the EFF, probably stung by the universal rejection of the points raised in its amicus curiae brief, does a big swing and a miss on a very simple point. "If use of someone's words was contingent on the permission of the person who said them, you would never be able to critique what was being said. Fair use allows the use of copyrighted material without permission for this very reason. It's not in the interest of anyone to license out clips of their material for the purpose of it being debunked, which is why the service provided by TVEyes is so valuable."[ref]Second Circuit Gouges TVEyes With Terrible Fair Use Ruling[/ref] This might be true if TVEyes was engaging in criticism of Fox News. But TVEyes is not doing that. It is not saying anything about Fox News at all, just copying 100% of Fox's output and retransmitting it, which as the Court found, is copyright infringement. TVEyes cannot bootstrap itself into a fair use safe harbor based on what some third party might do with the clips that TVEyes copies. Some might be fair use. Some might not. The good take-away from this decision is that a simple finding of "transformative use" was in the past a trump card that negated every other consideration of fair use, particularly in this Circuit. This was occurring despite the fact that the Courts had consistently ruled that all four factors must be considered. Also good was a growing skepticism about the way the "transformative use" test had been expanded beyond its original very narrow concept by the tech industry at large. A dissenting opinion would have not found that TVEyes use was transformative at all. The dissent stated: "Also closely aligned with this case are others that dealt with technologies relating to digitized music, mp3s, and music sharing. Defendants in those cases argued that their technologies should be considered fair use because they permitted ‘space-shifting'—they allowed users to store music in different, more convenient forms that allowed them to listen to it in venues more desirable to them. In other words, the technology enhanced efficiency and convenience. But courts presented with this argument either rejected the idea that space-shifting is a transformative purpose or considered the space-shifting argument relevant only to the question of the commercial nature of the use. These cases support my inclination to conclude that a technological means that delivers copies of copyrighted material to a secondary user more quickly, efficiently or conveniently does not render the distribution of those copies transformative, at least standing alone."[ref]Fox News Network, LLC v.TVEyes, Inc  dissenting opinion at7-8[/ref] And finally: "Similarly, Authors Guild, Inc. v. HathiTrust and Google Books cite Sony for various principles, but never for the proposition that efficiency-enhancing technology is transformative, despite that idea's obvious potential application in those cases. Because HathiTrust and Google Books so clearly confront an issue closely related to that here, I see as instructive their omission of the idea that Sony declared efficiency-enhancing delivery technology to be transformative. I would join those cases in declining to construe Sony as offering significant guidance regarding transformative use."[ref]Fox News Network, LLC v.TVEyes, Inc  dissenting opinion at 11-12[/ref] So, in sum. TVEyes, it's time for your eyes to shut.