A company that relays excerpts of Internet news articles to its customers violates copyright laws, a judge said Thursday in a decision that gave The Associated Press a victory in its attempts to protect its online news content.
U.S. District Judge Denise Cote rejected claims by Meltwater U.S. Holdings Inc. and its Meltwater News Service that its use of Web stories plucked from a scan of 162,000 news websites from more than 190 countries is a fair use of copyright-protected material.
"Investigating and writing about newsworthy events occurring around the globe is an expensive undertaking and enforcement of the copyright laws permits AP to earn the revenue that underwrites that work," Cote wrote in a decision released Thursday. "Permitting Meltwater to take the fruit of AP's labor for its own profit, without compensating AP, injures AP's ability to perform this essential function of democracy."
In a statement, Meltwater said it was disappointed and will appeal. It called the ruling "at odds with a variety of prior decisions that have paved the way for today's Internet."
The judge noted that commercial Internet news clipping services like Meltwater perform an important function for their customers, but that "does not outweigh the strong public interest in the enforcement of the copyright laws or justify allowing Meltwater to free ride on the costly news gathering and coverage work performed by other organizations. Moreover, permitting Meltwater to avoid paying licensing fees gives it an unwarranted advantage over its competitors who do pay licensing fees."
Meltwater is a 12-year-old electronic news clipping service that helps its clients monitor how they are covered in the press. In its lawsuit, the AP alleged that Meltwater News had been pilfering current and past material from the AP and other news providers without paying licensing fees.
AP CEO Gary Pruitt said: "We are thrilled. This is first and foremost a victory for the public and for democracy."
The judge rejected Meltwater's claims that it operates like a search engine.
"Meltwater News is an expensive subscription service that markets itself as a news clipping service, not as a publicly available tool to improve access to content across the Internet," she said. "Instead of driving subscribers to third-party websites, Meltwater News acts as a substitute for news sites operated or licensed by AP."
Cote praised the operation of legitimate search engines.
"These interests are complementary. The Internet would be far poorer if it were bereft of the reporting done by news organizations and both are enhanced by the accessibility the Internet provides to news gathered and delivered by news organizations," Cote said.
Meltwater said it believes Cote misapplied the fair use doctrine.
"Meltwater is especially troubled by the implications of this decision for other search engines and services that have long relied on the fair use principles for which Meltwater is fighting," the company said.
Jorn Lyseggen, Meltwater's founder and chief executive, said the company was considering options and looked forward to appealing to the 2nd U.S. Circuit Court of Appeals.
Lyseggen said he was confident the appeals court "will see the case a different way."
Pruitt said the ruling was important for the AP and "others in the news business who work so hard to provide high-quality original news reports on which the public relies."
"For years all of us have been hearing that if it is free on the Internet, it is free for the taking. The judge in this case just rejected that argument," he said.
Earlier this year, The New York Times, USA Today publisher Gannett Co. Inc., the McClatchy Co. and Advance Publications Inc. said in court papers that their businesses would be jeopardized if Meltwater was permitted to continue as it had.
The publishers said the ability of companies to distribute their content without paying licensing fees jeopardized their websites and other digital businesses that generate revenue through advertising, subscriptions and licensing fees.
One of Meltwater's competitors, BurrellesLuce, joined in a friend-of-the-court brief to say that it operates at a disadvantage because it pays to license content that Meltwater takes for free.
The Electronic Frontier Foundation and Public Knowledge supported Meltwater in a court brief.
Meltwater was founded in 2001 in Oslo, Norway. According to the company's website, it has more than 800 employees working in 55 offices around the world.
Explore further: Google hits back at rivals with futuristic HQ plan