Associated Press v. Meltwater U.S. Holdings, Inc., 2013 WL 1153979 (S.D.N.Y. Mar. 21, 2013) (full-text).
Factual Background Edit
The Associated Press is a news cooperative. Meltwater U.S. Holdings, operates an online news clipping service similar to traditional, paper-based news clipping services. Meltwater scans thousands of online news (162,000) websites daily and indexes and archives their content. AP holds the copyright to many of the news articles copied by Meltwater. Meltwater and AP are competitors.
Meltwater offers a news monitoring service to its subscribers and has more than 4,000 customers in the United States. It allows its subscribers access to online news based on the presence of certain words or phrases in news articles appearing on the Internet and receive excerpts of those articles. If an article contains a hit, Meltwater sends its customer verbatim excerpts of the article, typically consisting of the headline, "lede" — the opening sentence, a "Hit Sentence" (based on the search criteria) and a link to the original article. Customers can receive daily reports or do ad hoc searches. However, discovery showed that subscribers click-through to see the original article less than 1% of the time.
District Court Proceedings Edit
Meltwater argued that its use of the works was covered by the fair use doctrine, which allows for the use of copyrighted works for purposes including criticism, comment and news reporting. To determine whether the defendant's use of the copyrighted works are covered under the fair use doctrine the court considered four factors: the purpose and character of the use; the nature of the copyrighted work; the amount and the substantiality of the use in relation to the copyrighted work as a whole; and the effect on the use upon the copyrighted work and the potential market.
Meltwater contended that it functions as an Internet search engine, like Google, and its service is transformative of the original works. The court noted that, unlike Google — even though advertiser supported it is free to users, Meltwater is a for-pay subscription service. While the click-through rate on Google News is over 60%, it is under 1% for Meltwater, which suggests that Meltwater does not perform a search function, but actually provides the information sought by its subscribers. Unlike Google, instead of directing subscribers to the AP or other websites, Meltwater acts as a substitute.
The court further held that Meltwater's purpose or use of the works or the excerpts in its newsletters were not transformative. Not all alterations of the copyrighted work are transformative. A "use of copyrighted material that merely repackages or republishes the original is unlikely to be deemed a fair use" and a change of format is not transformative. The fair use doctrine protects transformation of copyrightable expression in the original work to be used to create new information, new insights and understandings.
The court found that Meltwater put the AP articles' excerpts to commercial use and its use of the articles lowered the value of AP's work. Further, Meltwater copied a qualitatively significant part of the AP articles (the "heart of the story") by copying the title, lede and materials surrounding the targeted keyword.