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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Partner

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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Socially Aware is devoted to the law and business of social media, proactively addressing emerging issues and keeping our clients informed of new developments. We cover fields such as artificial intelligence, privacy and data security, Section 230, intellectual property, and much more.

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Lawrence W. Gallick

Social Links: If the Suit Fits

Social Links: Age Verification, X Appeal, and the Great White North

Social Links: Fake Reviews, Real Rulings, and an Epic Fail

Lawrence W. Gallick on Toth v. Everly Well, Inc.

Social Links: Going Back to Cali

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Social media giant TikTok has been <a href="https://www.theguardian.com/technology/article/2024/aug/02/us-sues-tiktok-bytedance-child-privacy" target="_blank">sued by the United States</a> for allegedly collecting data on children under thirteen illegally. The suit claims the app, which is owned by China-based parent company ByteDance, allowed millions of children to create accounts without parental knowledge or consent despite <a href="https://www.wired.com/story/tiktok-ftc-record-fine-childrens-privacy/" target="_blank">paying a fine of $5.7 million</a> for similar activity in 2019. The United States is seeking penalties of up to $51,744 per violation, per day. The suit comes just three months after TikTok sued the U.S. government over a law that could ban it across the country. Read the <a href="https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rS0wyWEeUli0/v0" target="_blank">complaint</a> in its entirety.The U.S. Court of Appeals for the D.C. Circuit <a href="https://publishers.org/news/dc-circuit-court-rejects-effs-challenge-to-dmca-confirms-symbiotic-relationship-of-copyright-law-and-free-expression/" target="_blank">has rejected</a> a challenge to one aspect of the Digital Millennium Copyright Act (<a href="https://www.copyright.gov/dmca/" target="_blank">DMCA</a>). The action was initially brought by Electronic Frontiers Foundation (EFF) in 2016 and argued that Section 1201 of the DMCA – which prohibits the circumvention of technological measures that protect copyrighted works – is unconstitutional under the First Amendment. The <a href="https://publishers.org/wp-content/uploads/2024/08/Green-v-DOJ-opinion-2024.08.02.pdf" target="_blank">ruling</a> filed by Judge Nina Pillard states that while the First Amendment protects the right to read, it does not guarantee unrestricted access to all reading materials one might desire and does not guarantee potential fair users exceptional access to copyrighted works they wish to include in their expression. EFF maintains that the decision favors large commercial entities over individual fair users and sets a dangerous precedent for the future.Pickpocketing via tweet? Investor and online financial personality Andrew Left <a href="https://finance.yahoo.com/news/short-seller-andrew-left-deleted-110000470.html" target="_blank">deleted his research firm’s entire tweet history</a> from social media platform X ahead of his 19-count <a href="https://prod-i.a.dj.com/public/resources/documents/andrew-left-indictment07-26-2024.pdf" target="_blank">securities fraud indictment</a> and <a href="https://storage.courtlistener.com/recap/gov.uscourts.cacd.934731/gov.uscourts.cacd.934731.1.0.pdf">SEC lawsuit.</a> According to the SEC complaint, Left allegedly engaged in bait-and-switch schemes that involved making public recommendations contrary to his private trading positions which netted him $20 million in illicit gains between 2018 and 2023. The SEC also accused Left of sharing his planned announcements with at least two hedge funds in advance, receiving a portion of their trading profits in return. Left used X as a platform to promote short positions on a number of major companies including Roku, American Airlines, and Beyond Meat. The government maintains that Left’s public tweets were intended to illegally manipulate the market.<a href="https://www.theguardian.com/technology/article/2024/aug/06/elon-musk-x-advertising-lawsuit-antitrust" target="_blank">X has filed suit</a> against several major companies and a global advertising alliance. The suit accuses them of conspiring to boycott the social media platform and withhold advertising dollars in an attempt to damage the platform. Advertising revenue on X has declined since Elon Musk acquired the company in 2022, with many brands expressing concerns over the platform’s lack of content moderation. X chief executive Linda Yaccarino <a href="https://x.com/lindayaX/status/1820838134470328676" target="_blank">characterized the alleged boycott</a> in terms more sociological than financial, writing: “The consequence – perhaps the intent – of this boycott was to seek to deprive X’s users, be they sports fans, gamers, journalists, activists, parents or political and corporate leaders, of the Global Town Square.”Legislation targeting malicious use of deepfake technology <a href="https://www.govtech.com/policy/lawmakers-introduce-bipartisan-bill-to-fight-ai-deepfakes" target="_blank">continues to expand</a> and seems to be among the very few issues that can reliably garner bipartisan support. Representatives Ashley Hinson (R-IA) and Jake Auchincloss (D-MA) have <a href="https://auchincloss.house.gov/media/press-releases/release-auchincloss-introduces-bipartisan-bill-to-tackle-rise-in-non-consensualdeepfakes-on-social-media-platforms" target="_blank">introduced a bill</a> that would eliminate Section 230 protections for tech companies that allow deepfake pornography on their platforms. The bill would require tech firms to implement a “clear and accessible process for reporting, investigating and removing harmful content within 24 hours.” Additionally, it would require data logging that victims could access and a process for removing the offending content. This House bill is on the heels of related deepfake legislation that recently <a href="https://gizmodo.com/anti-deepfake-porn-bill-unanimously-passes-in-the-senate-2000479051" target="_blank">passed the Senate unanimously</a>.

Social Links: August 2024

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.

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.











Anthony Ramirez

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 Rubin

Social Links: August 2024

Social media giant TikTok has been sued by the United States for allegedly collecting data on children under thirteen illegally. 

On May 9, 2024, in <a href="https://casetext.com/case/x-corp-v-bright-data-ltd-1" target="_blank">X Corp. v. Bright Data Ltd</a>., the U.S. District Court for the Northern District of California dismissed X’s claims alleging that Bright Data’s access to X’s systems, and scraping and selling of publicly available data from X’s platform, violated its Terms of Service and other policies. Bright Data’s business involves various data scraping products and services, such as scraping data on behalf of its customers, selling tools that enable customer to scrape data, and providing IP proxies for customers to use when scraping data.As an initial matter, the court divided its analysis in two, first looking at X’s claims based on Bright Data’s improper access to X’s systems and then at X’s claims based on Bright Data’s scraping and selling of X’s data. The court easily dismissed the claims based on improper access to X’s systems, including claims for trespass to chattels, violation of California Section 17200 (prohibiting unlawful, unfair and fraudulent business acts), tortious interference with contract, and breach of contract. There was nothing particularly surprising in the court’s analysis of these claims, since the dismissals primarily resulted from X’s failure to plead adequate damages arising from Bright Data’s allegedly improper access.The more interesting aspect of Bright Data came next, where the court considered X’s claim that Bright Data’s scraping and selling of data violated X’s Terms of Service and held that X’s claims were preempted by federal copyright law.Section 301(a) of the Copyright Act states that federal copyright law preempts state-law claims when a plaintiff’s work “come[s] within the subject matter of copyright” and state law grants “legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright.” The court in Bright Data noted that there are two types of copyright preemption: (i) express preemption with respect to state law rights that are “equivalent” to federal copyright rights, and (ii) conflict preemption, where enforcement of the state law would more generally undermine the purpose of federal copyright law. The court in Bright Data focused on this second type of preemption.Under X’s Terms of Service, users retain ownership of the images, text, and other content that they upload to the X platform, and grant X a broad, non-exclusive, royalty-free license to display users’ content on the X platform and to use that content in various other ways, including by disseminating the user content through X’s paid tools. The Terms of Service also prohibit scraping and selling any content from the X platform.As a first step in its preemption analysis, the court notes that, under the Terms of Service, X does not own the user content that Bright Data scraped and sold, and X merely has a non-exclusive license to use the content. Under federal copyright law, a non-exclusive licensee is permitted to use the licensed works within the scope of the license, but has no right to enforce the copyright in, or exclude others from using, the works. Despite this, the claims that X asserted in Bright Data sought to enforce contractual terms that would give X the ability to exclude others from using the content in a manner that would otherwise be available only to the owner (or, possibly, the exclusive licensee) of the copyright in the content, not to a mere non-exclusive licensee.(As an aside, the court speculates that the reason that X does not require users to assign ownership of their content to X, or grant X an exclusive license to use content, under its Terms of Service is because this would impact X’s ability to claim the benefit of the safe harbors under Section 512(a) of the Digital Millenium Copyright Act and Section 230 of the Communications Decency Act, two federal statutes that protect website operators from liability arising from content posted by users. The court notes: “X Corp. wants it both ways: to keep its safe harbors yet exercise a copyright owner’s right to exclude, wresting fees from those who wish to extract and copy X users’ content.” In fact, it is not necessarily true that the availability of these statutory safe harbors turns on whether the website operator holds title (or an exclusive license) to the user content at issue. The more likely reason that X does not claim ownership of user content is that doing so would be viewed as overreach and result in significant backlash among its users. But as this issue is not central to the copyright preemption analysis, we leave it for another day.)The court then goes on to hold that X’s claim that Bright Data breached the Terms of Service by scraping and selling user content is preempted by federal copyright law in three ways, namely that enforcement of X’s contractual rights would:<ol class="li-text-orange"><ol class="li-text-orange"><ol class="li-text-orange"><li>Interfere with copyright owners’ exclusive rights and frustrate federal copyright law, since allowing X to enforce its Terms of Service would give it, a non-exclusive licensee, the ability to exclude others from exercising those rights;</li><li class="li-text-orange">Frustrate the operation of fair use, which would (absent a contract preventing it) allow use of the user content for certain permitted purposes (note that, as <a href="https://blog.ericgoldman.org/archives/2024/05/x-corp-v-bright-data-is-the-decision-weve-been-waiting-for-guest-blog-post.htm">observed</a> by guest blogger Guy Rub in Eric Goldman’s blog, the court seems to treat fair use as something akin to an affirmative right, rather than as the affirmative defense to an infringement claim that it actually is); and</li><li>Restrict use of type of information that Congress intended to keep free from restraint, namely uncopyrightable items such as likes, user names, short comments, etc. (It is not entirely clear how this can form a basis for preemption given that these items fall outside the scope of copyright law … but we digress.)</li></ol></ol></ol>Overall, the court presents an interesting new addition to web scraping law, one not addressed in a case that the court still found six occasions to cite, <a href="https://law.justia.com/cases/federal/appellate-courts/ca9/17-16783/17-16783-2019-09-09.html" target="_blank">hiQ Labs, Inc. v. LinkedIn Corp</a>. (see one of our <a href="https://www.sociallyawareblog.com/topics/ninth-circuits-linkedin-decision-does-not-greenlight-the-unauthorized-web-scraping-of-public-websites" target="_blank">previous articles</a> on that case). In light of Bright Data, website operators should be aware that contractual prohibitions contained in terms of service may not be effective to prevent scraping of user content that they make publicly available.

California Federal Court Holds X’s Claims Against Scraper Preempted by Federal Law

California Federal Court Holds X’s Claims Against Scraper Preempted by Federal Law

On May 9, 2024, in X Corp. v. Bright Data Ltd., the U.S. District Court for the Northern District of California dismissed X’s claims alleging that Bright Data’s access to X’s systems, and scraping and selling of publicly available data from X’s platform, violated its Terms of Service and other policies.

A federal district court <a href="https://www.businessinsider.com/gigi-hadid-instagram-reposting-copyright-infringement-lawsuit-paparazzi-photos-ownership-2019-6?utm_content=buffer0eb8d&utm_medium=social&utm_source=linkedin.com&utm_campaign=BI-linkedinhttps://assets.documentcloud.org/documents/6208049/418514600-Xclusive-v-Hadid-Order-on-MTD.pdf" target="_blank" rel="noopener">dismissed a case</a> against supermodel Gigi Hadid for posting to Instagram a photo of herself that was taken by a paparazzo. The reason for the court’s decision was simple: The party claiming copyright ownership of the photo failed to get it registered with the U.S. Copyright Office, a prerequisite to filing an infringement suit against alleged violators.If the plaintiff in the suit had complied with the copyright registration process and required the court to make a substantive decision,  the court’s opinion would necessarily have had to, as the Hollywood Reporter wrote, clarify a celebrity’s “right to control how others profit from [that celebrity’s] likeness” and address a “battle that involves a copyright law written before the dawn of the internet, before legislators could imagine social phenomena like Instagram’s billion users and hundreds of millions of daily photo uploads.”The facts of Hadid’s case are common; celebrities are sued by paparazzi for posting photos of themselves to social media <a href="https://wwd.com/fashion-news/fashion-scoops/ariana-grande-settles-instagram-lawsuit-1203230459/" target="_blank" rel="noopener">all the time</a>. In this particular suit against a supermodel, an independent photo agency <a href="https://www.businessinsider.com/gigi-hadid-instagram-reposting-copyright-infringement-lawsuit-paparazzi-photos-ownership-2019-6?utm_content=buffer0eb8d&utm_medium=social&utm_source=linkedin.com&utm_campaign=BI-linkedin" target="_blank" rel="noopener">claimed Hadid had violated its copyright in a photo</a> of herself when Hadid posted the picture to social media despite the fact that Hadid had arguably contributed to the image by smiling for the photo, selecting the outfit she’s wearing in it, and even cropping the photo for posting.The suit <a href="https://www.hollywoodreporter.com/thr-esq/gigi-hadid-heroine-copyright-revolution-guest-column-1226378" target="_blank" rel="noopener">had the potential to test legal theories, such as the “fair use” doctrine, that could protect celebrities from copyright infringement</a> liability for posting  paparazzi-taken photos of themselves to social media. Although those theories weren’t tested this time around, “<a href="https://www.hollywoodreporter.com/thr-esq/gigi-hadid-heroine-copyright-revolution-guest-column-1226378" target="_blank" rel="noopener">it’s an imminent fight</a> that could spark the type of legal rethinking needed when the old rules fail to accommodate new realities.”

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By Winning Motion to Dismiss, Supermodel Loses Chance to Clarify Whether She Can Lawfully Post Photos of Herself to Social Media

By Winning Motion to Dismiss, Supermodel Loses Chance to Clarify Whether She Can Lawfully Post Photos of Herself to Social Media

A federal district court dismissed a case against supermodel Gigi Hadid for posting to Instagram a photo of herself that was taken by a paparazzo. The reason fo

A federal district court in California has added to the small body of case law addressing whether it’s permissible for one party to use another party’s trademark as a hashtag. The court held that, for several reasons, the 9th Circuit’s nominative fair use analysis did not cover one company’s use of another company’s trademarks as hashtags. Whether a hashtag is capable of functioning as a trademark, the topic of <a href="https://www.sociallyawareblog.com/2016/07/18/trademarks-hashtags-as-trademarks-revisited/" target="_blank" rel="noopener">two of Socially Aware’s most popular posts</a>, is—of course—another issue entirely.In what The New York Times <a href="https://www.nytimes.com/2019/04/24/us/politics/supreme-court-class-arbitrations.html" target="_blank" rel="noopener">describes</a> as “the latest in a line of rulings allowing companies to use arbitration provisions to bar both class actions in court and class-wide arbitration proceedings,” the Supreme Court <a href="https://www.supremecourt.gov/opinions/18pdf/17-988_n6io.pdf" target="_blank" rel="noopener">held</a> that the employment agreements of workers at the lighting fixture retailer Lamps Plus can’t band together to sue the company for allegedly failing to protect their data. The <a href="https://www.nytimes.com/2019/04/24/us/politics/supreme-court-class-arbitrations.html" target="_blank" rel="noopener">details of the data breach</a> make for an interesting read.The U.K.’s data regulator has proposed rules that would prevent social media platforms from allowing children to “like” posts. <a href="https://www.cnbc.com/2019/04/15/social-media-like-button-may-be-stopped-for-children-in-uk-proposals.html" target="_blank" rel="noopener">Here’s why</a>.Officials in a Georgia city might pass a law that would allow elected and appointed officials and employees of the city to sue—at the city’s taxpayers’ expense—<a href="https://patch.com/georgia/atlanta/ga-city-officials-may-be-allowed-sue-social-media-critics" target="_blank" rel="noopener">anyone who defames them on social media</a>.Instagram influencer Gianluca Vacchi, who is not a fictional character, but—<a href="https://www.bloomberglaw.com/document/X5UTCPN0000000?bna_news_filter=ip-law&jcsearch=BNA%25200000016a4533d4e9a1ea4dfbb15c0002#jcite" target="_blank" rel="noopener">according the complaint</a> he filed in a federal court in New York—“an international social media celebrity, influencer, fashionista, and disk jockey” —is suing E*Trade for allegedly depicting a character in its commercials who is “stunningly identical” to him. The suit claims copyright infringement, Lanham Act false association and unfair competition, and violation of New York’s right of publicity and privacy.The Chinese social media company Weibo restored access to <a href="https://www.cnn.com/2019/04/17/tech/weibo-china-censorship-lgbt-intl/index.html" target="_blank" rel="noopener">this type of content</a> from its platform after significant backlash from its users.In the age of smartphones and social media, <a href="https://abovethelaw.com/2019/04/keeping-your-jury-from-social-media-contamination/" target="_blank" rel="noopener">what can trial lawyers do</a> to secure a jury that relied only on the evidence presented in court?<a href="https://www.mediapost.com/publications/article/335370/mcdonalds-installs-ai-powered-menus-to-predict-or.html?utm_source=newsletter&utm_medium=email&utm_content=readmore&utm_campaign=113751&hashid=NRXuC8pKmXtE-dqs2eMnXiesZog" target="_blank" rel="noopener">Artificial intelligence</a> is informing which items McDonald’s includes on its outdoor digital menu displays.The California State Bar is considering using artificial intelligence, too. The bar hopes that AI can help it to more efficiently determine which attorney misconduct complaints to pursue, and <a href="https://abovethelaw.com/2019/05/california-bar-exploring-opportunities-to-deploy-ai/" target="_blank" rel="noopener">perform a function that affects every wannabe lawyer</a>.Should Wendy’s put Spicy Chicken Nuggets back on its menu? Social media users have spoken (with some prompting from Chance the Rapper).

Trademarks as hashtags; influencer sues company allegedly depicting him in an ad; new uses for AI technology

A federal district court in California has added to the small body of case law addressing whether it’s permissible for one party to use another party’s trademar

Trademarks as hashtags; influencer sues company allegedly depicting him in an ad; new uses for AI technology

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>.

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In re Maxus Energy Corp.

In re Energy Future Holdings Corp.

James Paul McCartney v. Sony/ATV Publishing LLC

NFL Enterprises LLC v. EchoStar Satellite LLC

VOOM HD Holdings LLC v. EchoStar Satellite LLC

Change Healthcare Operations, LLC v WebMD Health Corp. 2017 WL 6610411  

Register.com, Inc. v. Verio, Inc.

Komag, Inc. v. Asahi Glass Co. Ltd.

Asante Techs. Inc. v. PMC–Sierra, Inc.

Biovail Corp. v. S.A.C. Capital Mgmt. 2009 WL 2844404 

Multi–Faceted Investigation of University Grants

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J. Alexander Lawrence

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