Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

Aaron P. Rubin

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Lawrence Gallick

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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In U.S. copyright law circles, one of the hottest topics of debate is the degree to which the fair use doctrine—which allows for certain unauthorized uses of co

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All Eyes on Fair Use: The Second Circuit Delivers a Victory for Copyright Owners

All Eyes on Fair Use: The Second Circuit Delivers a Victory for Copyright Owners | Socially Aware

J. Alexander Lawrence

In U.S. copyright law circles, one of the hottest topics of debate is the degree to which the fair use doctrine—which allows for certain unauthorized uses of copyrighted works—should protect companies building commercial products and services based on content created by others, especially where such products or services are making transformative uses of such content.This debate is likely to become even more heated in the wake of the Second Circuit Court of Appeals’ issuance last week of its <a href="https://www.courthousenews.com/wp-content/uploads/2018/02/tveyes-fox.pdf">long-awaited decision</a> in the copyright dispute between Fox News and TVEyes, in which the court sided with the copyright owner over the creator of a digital “search engine” for identifying and viewing television content. But regardless of which side of the debate you are on (or if you are just standing on the sidelines), the court’s decision provides important guidance on the scope of the fair use doctrine as applied to commercial products and services.<h5>The Dispute</h5>Using the closed-captioning data that accompanies most television programming, TVEyes provides a searchable database of video clips. TVEyes’ subscribers—who pay $500 a month—can search the database for keywords in order to identify and view video clips from the service; such video clips may be as long as ten minutes in duration.In July 2013, Fox sued TVEyes for copyright infringement and, in August 2015, Judge Hellerstein of the U.S. District Court for the Southern District of New York held that the key features of the TVEyes service are protected under the fair use doctrine.In support of their respective positions at the district court level and on appeal, both parties pointed to the Second Circuit’s decision in the Google Books case, in which the Second Circuit held that Google’s creation of a searchable database of millions of published books enabling users to view short snippets of the books constitutes a fair use. District court Judge Hellerstein <a href="https://law.justia.com/cases/federal/district-courts/new-york/nysdce/1:2013cv05315/415525/173/">found that the Google Books decision supported a fair use finding for TVEyes</a>.Now, more than two years later, the Second Circuit, in consideration of the same precedent, reached the opposite conclusion, finding <a href="https://www.law.cornell.edu/uscode/text/17/107">the four-factor fair use test</a> weighed against TVEyes. Although the court acknowledged its Google Books decision as a key precedent, it cautioned that the decision “tested the boundaries of fair use,” and that the TVEyes service at issue had “exceeded those bounds.”<h5>The First Fair Use Factor: The Purpose and Character of the Secondary Use</h5>Regarding the first factor—the “purpose and character” of the defendant’s use of the plaintiff’s work—courts have increasingly focused primarily on whether the defendant’s use is “transformative,” that is, whether the defendant’s use “<a href="https://www.leagle.com/decision/infco20151016081">communicates something new and different from the original or [otherwise] expands its utility</a>.” Here, the Second Circuit found that TVEyes’s copying of Fox News content in order to enable “nearly instant access” for viewing purposes to portions of such content “is at least somewhat transformative.”The Second Circuit’s first-factor analysis, however, did not end with this observation; the court also considered the commercial nature of TVEyes’s use of Fox News content:The commercial nature of a secondary use weighs against a finding of fair use. And it does so especially when, as here, the transformative character of the secondary use is modest. The [TVEyes service at issue] 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.”The court rejected TVEyes’s argument that its customers’ use of service-generated video clips for their research needs strengthened the transformative nature of the service. The court noted that “[t]he clients of TVEyes use Fox’s news broadcasts for the same purpose that authorized Fox viewers use those broadcasts—the purpose of learning the information reported.”Bottom line: The court concluded that “[t]he first statutory factor . . . favors TVEyes, albeit slightly.”<h5>The Second Fair Use Factor: The Nature of the Copyrighted Work</h5>The Second Circuit, quoting its Google Books decision, stated that the second fair use factor—which looks at the nature of the plaintiff’s copyrighted work—“has rarely played a significant role in the determination of a fair use dispute” and added that “it plays no significant role here.”Bottom line: The second factor “is neutral in this case,” favoring neither party.<h5>The Third Fair Use Factor: The Amount and Substantiality of the Portion of the Work Used</h5>The third factor focuses on the amount and substantiality of the portion used in relation to the copyrighted work as a whole. The court held that “[t]his factor clearly favors Fox because TVEyes makes available virtually the entirety of the Fox programming that TVEyes users want to see and hear.” The court noted that, in this regard, the TVEyes service at issue is “radically dissimilar” to the service at issue in Google Books, which was designed “to ensure that users could see only a very small piece of a book’s content.”Bottom line: The third factor “strongly favors” Fox News because TVEyes’s use of Fox’s content is “both ‘extensive’ and inclusive of all that is ‘important’ from the copyrighted work.”<h5>The Fourth Fair Use Factor: Effect on Potential Market for or Value of the Work</h5>Quoting the U.S. Supreme Court’s 1985 <a href="https://supreme.justia.com/cases/federal/us/471/539/case.html">Harper & Row decision</a>, the Second Circuit noted that the fourth factor—which concerns the effect of the defendant’s use upon the potential market for or value of the copyrighted work—is “undoubtedly the single most important element of fair use.” The court summarized and weighed the parties’ respective fourth-factor positions as follows:TVEyes argues that its service poses little risk of being a “competing substitute” for Fox’s offering . . . . Fox argues that TVEyes undercuts Fox’s ability to profit from licensing searchable access to its copyrighted content to third parties. Fox has much the stronger point.The court further observed, “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.”Bottom line: “[T]he fourth factor favors Fox . . . because TVEyes has usurped a function for which Fox is entitled to demand compensation under a licensing agreement.”<h5>The Outcome</h5>Tallying up the four factors—one slightly favoring TVEyes, two favoring Fox and one favoring neither party—the Second Circuit concluded that “the balance strongly favors Fox and defeats the defense of fair use.” The case was remanded to the district court to revise and broaden an earlier-issued injunction to cover the TVEyes’ video watch service, in accordance with the Second Circuit’s opinion.<h5>Concluding Thoughts</h5>The fair use doctrine has been on quite a run. In recent years, rights holders have complained that courts have been expanding the doctrine beyond its traditional boundaries to protect intensely commercial activity. Proponents of the fair use doctrine note that it is essential to foster innovative and popular services, especially in the digital age.The Second Circuit decision shows that fair use still has its limits, especially in the commercial context. It also highlights that judges looking at the same facts and applying the same multifactor fair use test often reach differing conclusions. That means, going forward, we will likely continue to see high-stakes litigation between copyright owners and digital content platforms and distributors. *                   *                  *Editors’ Note: Morrison & Foerster attorneys (but not the authors of this post) assisted in the preparation of an amicus brief by the National Association of Broadcasters that was filed with the Second Circuit in support of Fox News. As always, the views expressed herein are not to be attributed to Morrison & Foerster or its clients.For more on the fair use defense to copyright infringement, check out these Socially Aware posts: <a href="https://www.sociallyawareblog.com/2015/11/17/google-books-and-fair-use-from-implausible-to-inevitable/">Google Books and Fair Use: From Implausible to Inevitable?</a>; <a href="https://www.sociallyawareblog.com/2013/04/02/southern-district-of-new-york-examines-whether-news-clipping-service-qualifies-as-fair-use-under-copyright-act/">Southern District of New York Examines Whether News Clipping Service Qualifies as Fair Use Under Copyright Act</a>; and <a href="https://www.sociallyawareblog.com/2012/06/18/what-what-in-the-court-south-park-studios-shielded-by-fair-use-for-viral-video-parody/">What, What (In the Court): South Park Studios Shielded by Fair Use for Viral Video Parody</a>.