The law may finally be reigning in the technology industry’s push to expand the fair use doctrine. Recent influential court decisions found in favor of the copyright holder, including one case that presented similar facts to Google Books. In Google Books, the court justified the technology giant’s unauthorized scanning of millions of copyright-protected works to create a searchable, snippet-producing database.
The court found the database to be sufficiently “transformative,” and thus, fair use. [See ECPA Legal Update: A New Era for Fair Use, Oct. 2015]. But recent cases have shied away from affording so much weight to the “transformative” factor of fair use analysis. Instead, the focus is shifting to the “market harm” factor, and how the use at issue impacts rights holders.
In December, the U.S. Supreme Court declined to hear a case involving a digital archive of news videos, leaving in place the influential opinion by a federal appellate court. In Fox News Network v. TVEyes, Inc. , TVEyes recorded multiple news channels and indexed them in a searchable database. Users could search for certain keywords and the TVEyes service would display video clips and searchable-text transcripts containing the relevant search terms.
The entire process sounds eerily like a digital video version of the Google Books database, and many observers expected the court to follow its Google Books precedent. But the court ruled differently, finding the damage to the copyright owners’ licensing market outweighed the transformative nature of TVEyes’ database. It also helped that TVEyes was a commercial venture, limiting access to paying subscribers, but even so, the court wrote that the “market harm” factor was “undoubtedly the single most important element of fair use.”
Another recent opinion by the same federal appellate court emphasized the importance of the TVEyes decision . In ruling against “used digital music” advocate ReDigi and its much-litigated music-sharing platform, the court cited the “market harm” fair use factor of TVEyes. The court wrote that ReDigi’s technology to allow transfer and removal of music files may be transformative to some degree, as was TVEyes’ video database, but “the substantial harm ReDigi inflicts on the value of Plaintiffs’ copyrights through its direct competition in the rights holders’ legitimate market…[would offer] consumers a substitute for purchasing from the rights holders. We find no fair use justification.”
The impact of these cases may already be influencing industry organizations. On February 4, the Association of American Publishers (AAP) issued a forceful response to the white paper encouraging advancement of the Internet Archive’s “Open Library” project and “controlled digital lending.” The white paper promotes the view that a library’s scanning of physical books and lending of the resulting digital images as eBooks would not run afoul of copyright law. Perhaps emboldened by TVEyes and ReDigi, the AAP strongly rejected the white paper, writing that its position “denigrates the incentives that copyright law provides to authors and publishers.”
 Fox News Network, LLC v. TVEyes, Inc., 883 F.3d 169 (2d Cir. 2018).
 Capitol Record LLC v. ReDigi, Inc., No. 16-2321 (2d Cir. Dec. 12, 2018).