Meltwater Aggregator Case Poised To Address Headline, Lead Clips

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By Angela Gregorits

DANA POINT, Calif.--The Meltwater clipping service litigation promises to further define the legal playing field for online news aggregators, especially insofar as replication and retransmission of headlines and leads are concerned, according to a speaker participating in a Feb. 8 panel discussion at the American Bar Association Forum on Communications Law's 18th Annual Conference.

The case will focus on “all of the important issues,” including substantial similarity, transformative use, and derivative use, according to Andrew L. Deutsch of DLA Piper, New York, who spoke during a plenary session titled “Aggregators, Hot News, and Efforts to Enforce Copyrights in the Digital Age.” The case involves a clipping service, and, as such, “sweeps in more” than the Righthaven-type cases by targeting a different business model, Deutsch said.

The AP Sues Online Clipping Service
In February 2012, the Associated Press sued Meltwater U.S. Holdings Inc., alleging that the online commercial clipping service was committing direct and secondary copyright infringement, as well as “hot news” misappropriation, by distributing excerpts and full-text copies of AP news stories to paying customers in direct competition with the AP. Associated Press v. Meltwater U.S. Holdings Inc., No. 12-1087 (S.D.N.Y., complaint filed 2/14/12) (31 PTD, 2/16/12).

At the time the lawsuit was filed, the AP released a statement stating, “This lawsuit is not a general attack on news aggregators--many of whom are AP's licensees.” It also said the lawsuit was not seeking “to restrict linking or challenge the right to provide headlines and links to AP articles.”

Instead, its grievance against Meltwater was that the e-mail-based clips service allowed subscribers to download and save both excerpts and full-text AP articles on its servers for later viewing, and to translate them into other languages.

The e-mail report includes the headline and lead paragraph of each article, together with an excerpt, and allows customers to click through to the full article. Those activities infringe AP copyrights and also constitute hot news misappropriation under New York law, the AP alleged.

Meltwater has been held liable for copyright infringement abroad. The England and Wales Court of Appeal held in July 2011 that Meltwater users would infringe news story copyrights unless they have a license, upholding a ruling from the High Court of Justice (151 PTD, 8/5/11).

The Meltwater service allows subscribers to pre-select subject areas of interest, and then have news delivered in real time as soon as it gets to the internet, Deutsch explained.

Infringement Found in Nihon Keizaiand Perfect 10
Nihon Keizai Shimbun Inc. v. Comline Business Data Inc., 166 F.3d 65, 49 U.S.P.Q.2d 1516 (2d Cir. 1999), found that abstracts or rough English translations of articles from a Japanese newspaper constituted copyright infringement and did not qualify as fair-use news reporting, because they adopted the same protectable structure and organization of the facts reported in the articles.

However, there was no finding of substantial similarity, and thus no copyright infringement, with respect to an abstract that copied only the first paragraph, or 20 percent, of a six-page article. Nihon Keizai stressed that it did not intend to establish any principle that, as a quantitative matter, a work that copies 20 percent of a copyrighted work is never substantially similar.

Given the Second Circuit's holding, it is relevant to ask whether the headline and lead at issue in a Meltwater clip comprise less than 20 percent of the story, Deutsch said.

Whether the purpose and character of the use make it transformative is also at issue in Meltwater, Deutsch said. The Second and Ninth Circuits disagree as to whether something new must be added to render a use transformative. In Nihon Keizai, the Second Circuit concluded that most of the abstracts at issue were not transformative, because, among other factors, they were mostly direct translations of articles and added almost nothing new.

But Perfect 10 Inc. v. Inc., 487 F.3d 701, 82 U.S.P.Q.2d 1609 (9th Cir. 2007) (95 PTD, 5/17/07), held that Google Inc.'s communication of stored “thumbnail” versions of the plaintiff's copyrighted images to users is highly transformative, because, among other matters, it provides a social benefit by incorporating the original work into an electronic reference tool.

Perfect 10 also held that in some contexts, a claim of infringement of the right to make derivative works hinges upon a valid claim for infringement of the plaintiff's reproduction rights. Thus, the question of derivative use is also at stake in Meltwater, Deutsch indicated.

Although Deutsch projected that Meltwater would make determinations in key areas, panelists appeared to agree that fair use rulings in online news aggregation cases would continue to be made on a case-by-case basis. Panelist Eric Lieberman of The Washington Post cautioned that the case represents only one in the burgeoning field, and that, in his view, the rules of the game will never be clarified solely through litigation. Srinandan Kasi of news article licensing service NewsRight, New York, in turn, voiced support for market-based business solutions to the copyright issues at stake.

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