U.S. District Court for the Southern District of New York rejects Meltwater’s fair use defense

On 21 March 2013, the U.S. Southern District of New York held that the publication by Meltwater of excerpts from Associated Press articles was copyright infringement for which the fair use defense was not available.

Meltwater is an online media monitoring service that offers its clients reports about news articles published on different topics, based on keywords selected by the client. To that end, Meltwater uses different algorithms to scrape content from different sources on the Internet. After noticing that Meltwater had distributed to its client various excerpts – most notably the headlines and the lead paragraphs – of several of its articles without asking for any licenses or authorization to use this content, AP sued Meltwater for copyright infringement. Meltwater primarily claimed that the publication of these excepts was transformative and therefore covered by the fair use defense since, akin to a search engine, it only provided a limited amount of copyrighted material in response to client’s queries.

The Court rejected this defense based on the four statutory fair use factors. In particular, the Court rejected the fair use defense based on three of the four fair use factors:

(i)         Purpose and character of the use:

The Court observed that the use made by Meltwater of AP’s article was commercial and competitive, rather than transformative. In particular, the Court quoted limited evidence which showed that customers clicked through to the original AP articles only 0.08% of the time!

(ii)        Amount of work used in relation to the work as a whole:

The Court stressed that Meltwater had copied a significant portion of AP’s articles (between 5 and 60%) and most importantly the title and lead paragraph of each article, allowing users to abstain from clicking on the original article.

(iii)       With regard to the fourth factor, i.e. effect of the use on the potential market, such a use had a significant effect on AP’s potential market for his work since Meltwater’s excerpts effectively replaced the AP articles, depriving AP of substantial licensing revenues.

The Court concluded that Meltwater’s use of AP’s articles was not covered by fair use, emphasizing that Meltwater’s business model relied on the systematic copying of protected expression and that the sale of collections of these copies as reports competed directly with the copyright owner. [Béatrice Martinet Farano]