Plaintiff MidlevelU operates a website for midlevel healthcare providers (e.g., nurse practitioners and physician assistants) that features a blog that the court describes as "designed to attract potential customers to its revenue-generating resources." MidlevelU makes the full text of its blog articles available in an RSS feed. Defendant Newstex, an aggregator of news publications, offered to subscribers (mostly academic institutions) a product called the Scholarly Blog Index (the "Index"), a curated index of full-text academic blog posts (where it had a license from content owners) and abstracts of posts (where it didn't have a license). Newstex subscribed to MidlevelU's feed, created computer-generated summaries of the posts, and included in the Index those summaries, bibliographic information, and a link to the original posts. Subscribers also could click on a different link to see the full text of the original post through an iFrame. Plaintiff wasn't happy and sued for copyright infringement.
There are a lot of issues in this case, but I will focus only on only two:
- By making the blog available in an RSS feed, did MidlevelU grant to Newstex an implied license to include the blog in its subscription product?
- Was Nestex's use of MidlevelU's copyrighted blog articles a fair use under copyright law?
After a jury trial, the district court granted MidlevelU’s motion to dismiss Newstex's affirmative defense that an implied license had been granted. A panel of the Eleventh Circuit affirmed the ruling, but on alternate grounds.
While the Copyright Act requires that a transfer of copyright ownership or an exclusive license be in writing, a non-exclusive license can be granted verbally or inferred through conduct. See 17 U.S.C. § 204(a) (a "transfer of copyright ownership ... is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed"); 17 U.S.C. § 101 ("transfer of copyright ownership" defined to exclude non-exclusive licenses). The question here was whether a non-exclusive implied license could be inferred based on MidlevelU's making its blog available via an RSS feed without restrictions.
The district court didn't thinks so, based on its interpretation of Latimer v. Roaring Toyz, Inc., 601 F.3d 1224 (11th Cir. 2010). Latimer involved the not uncommon situation (much as we lawyers wish the world were otherwise) where one party commissions an artist to create a copyrightable work, but the parties never get around to executing a written agreement that addresses ownership or license terms. (For a classic decision addressing that type of situation see Effects Associates, Inc. v. Cohen.) In that context, the Latimer court held that “[a]n implied license is created when one party (1) creates a work at another person’s request; (2) delivers the work to that person; and (3) intends that the person copy and distribute the work.” Because it was undisputed that MidlevelU had not created its blog posts at Newstex's request (the first element of the Latimer "test"), the district court concluded that there could be no implied license.
The appellate court agreed with Newstex that the district court had applied Latimer incorrectly. Latimer addressed the creation of an implied license in one particular context: "in a work-for-hire relationship." However, implied licenses can arise in other circumstances, as other courts have recognized. "Creating material at another’s request is not the essence of a license; an owner’s grant of permission to use the material is." The relevant inquiry is whether an owner’s conduct clearly manifests its consent to allow others to use its copyrighted material.
The court employed the following metaphor to illustrate, in an online context, when an implied license is created and how to determine the scope of an implied license:
"[A] website is like a brick-and-mortar business that licenses the general public to enter the premises for business purposes, an entry that would otherwise constitute a trespass. But as in the brick-and-mortar context, a person may not infer permission beyond the customary scope of the license, such as if the person sought to enter a business through a back window instead of the front door or for a nonbusiness purpose like throwing a party." (Citations omitted.)
Even though the district court got the standard wrong, the panel nevertheless affirmed the district court's refusal to allow the jury to consider Newstex's implied license affirmative defense. The evidence in the record supported that MidlevelU had granted an implied license to individuals who subscribed to its feed, but the scope of that license was limited to allowing those individuals to make personal use of the RSS-distributed content (i.e., to read the content through an RSS reader). There was no evidence in the record to support the existence of an implied license that was broad enough to cover Newstex’s commercial use of the blog content in the Index. Perhaps a license could have been implied if Newstex had been able to demonstrate that there was a custom in the industry, that was widely accepted by content owners, that aggregators were entitled to use RSS-feed content in subscription products. Cf. Field v. Google Inc.,412 F. Supp. 2d 1106 (D. Nev. 2006). Perhaps. However, Newstex failed to introduce evidence that such a custom existed.
By voluntarily making its content available via the RSS feed, MidlevelU clearly authorized some uses of that content. So, the question was not whether an implied license existed; the question really was what was the scope of that license? Picking up on its metaphor, the court framed it this way:
"Implied permission to enter the front door to shop (read the content through an RSS reader for personal purposes) does not imply permission to enter and throw a party (sell computer-generated summaries paired with iFrames showing the full-text content).
The panel also refused to disturb the jury's verdict that Newstex's use of MidlevelU's articles did not qualify under the doctrine of fair use because "reasonable minds could differ as to all four factors and the weight to afford each factor." Here is a quick rundown of the court's analysis of the statutory factors.
Purpose and Character of the Use: The panel held that the jury could reasonably have concluded that Newstex's use was not transformative. Newstex argued that the Scholarly Index was, essentially, a search engine, and that, therefore, the manner in which it used MidlevelU's content was inherently transformative. Although the Scholarly Index had some features of a search engine (e.g., subscribers could search for relevant information), merely "making copyrighted material searchable does not alone change the original purpose of the material." Moreover, the inclusion of iFrames showing the full-text content of MidlevelU's articles could have led a reasonable juror to conclude that the Index merely "superseded the objects" of MidlevelU’s blog and was not transformative. In addition, the commercial purpose of the Scholarly Index weighed in favor of the MidlevelU. The fact that MidlevelU made its articles available at no cost to readers was irrelevant; the inquiry is whether Newstex’s use was commercial. And since the record reflected that Newstex paid other content providers for full-text licenses, "the jury could have reasonably found that Newstex stood to profit from exploitation of the copyrighted material without paying the customary price” (internal citations omitted).
The Nature of the Copyrighted Work. The nature of the posts varied: some were on the factual/informational end of the spectrum, and others were more creative and included the authors's personal experiences. The court concluded that "[a]t most, this factor is neutral" and that the jury reasonably could have found that the articles were sufficiently creative to weigh against a finding of fair use.
The Amount and Substantiality of the Portion Taken. The fact that Newstex provided subscribers with access to the full-text content through iFrames militated against a finding of fair use. "Even disregarding the iFrames, reasonable minds can differ as to whether Newstex used more of MidlevelU’s content than necessary" when it created its summaries (which the court described as "short-form copies that included "a substantial portion of each article").
Effect of the Use on the Potential Market for or Value of the Copyrighted Work. Finally, the panel found that there was evidence on both sides for this factor. The fact that MidlevelU made the blog available for free to readers and that it did not present evidence of lost readership caused by the Index was not, according to the court, conclusive evidence that Newstex's use did not affect the market. And the jury reasonably could have concluded that that the Index served as a market substitute for, and impacted the market for, MidlevelU's blog since the Index made the full text of the blog content available through iFrames.
MidlevelU, Inc. v. ACI Information Group, __ F.3d __, 2021 WL 805534 (11th Cir. Mar. 3, 2