Meltwater in hot water over business model

The Kat has a technical
 solution to the Meltwater problem

"Do you know where your web end is?" That was the question with which the IPKat introduced his analysis of  Newspaper Licensing Agency Ltd and others v Meltwater Holding BV and other companies [2010] EWHC 3099 (Ch), in which Mrs Justice Proudman (Chancery Division, England and Wales) gave a ruling back in December of last year. If you operate a media monitoring service, she said, this being a business that provides customers with copies of headlines and extracts from articles on newspaper websites, your customers will infringe the copyright in those newspapers if they don't have a "web end-user licence" to use and receive those headlines and extracts from you.

In this action the claimants (a number of newspaper publishers and the NLA, a company that managed some of their intellectual property rights) sought a declaration that the Public Relations Consultants Association Limited -- PRCA --a professional association representing public relations providers -- and its members needed a copyright licence in order lawfully to receive and use copies of the claimants' newspaper content.   The media monitoring service consisted of the supply of reports which included the headline, opening text and an extract from articles which matched search terms selected by the customer. Whether these reports were sent by email to the PRCA or downloaded from Meltwater's website, they inevitably ended up being copied into the memory of PRCA's computer.

In these proceedings the judge was asked to rule on the following issues:

(i) is a newspaper headline capable of being a free-standing original literary work?

(ii) Does the text extract constitute a "substantial part" of the article as a literary work?

(iii) do the PRCA and its members need a web end-user licence from the NLA or its members in order to lawfully use and receive Meltwater's service?

Mrs Justice Proudman first identified the relevant principle of law, this being the test laid out by the Court of Justice of the European Union in Case C-5/08 Infopaq International A/S v Danske Dagblades Forening: no distinction should be be made between part of an article and the whole, provided that the part contained elements which were the expression of the author's intellectual creation. The Information Society Directive (2001/29), which governed the extraction of works, did not itself make reference to the need for the extraction to be of a "substantial part" of the copied work.  Rather, the Directive (as Infopaq explained) made it clear that originality -- not substantiality  -- was the test to be applied to the part extracted.  

On this basis the judge attacked the questions before them and answered them as follows:

(i) On evidence from the newspaper publishers that the creation of headlines involved considerable skill, some headlines were indeed capable of being independent literary works. However, even those that were not independent legal works still formed part of the articles to which they related.

(ii) As to whether the text extracts constituted a substantial part of the articles, what is decisive is the quality of the extracted part and the level of the author's skill and labour which the copier has appropriated, not the amount extracted. In Infopaq the Court of Justice found that copying an extract of 11 consecutive words from an article would be partial reproduction in part for the purposes of Article 2 of the InfoSoc Directive -- so long as those words had the necessary quality of originality. This does not require the court to conduct some sort of assessment of whether the extract is novel or artistically worthwhile on its own, since that would be treating the extract as if it was itself a literary work. In these proceedings, many of the text extracts did contain elements that could be said to be the expression of the intellectual creation of the author of the article as a whole, and which thus infringed.

(iii) Since customers of the media monitoring service made copies of the headline and text extract when viewing or accessing Meltwater's report, there was a prima facie copyright infringement. There were no fair dealing or other defences either, since the sole reason why the extracts were copied was to see if the news items were of any further use or not. 

Today the Court of Appeal dismissed the PRCA's appeal. In [2011] EWCA Civ 890 the Chancellor of the High Court, together with Lords Justices Jackson and Elias, took just 51 paragraphs to affirm the position taken by Proudman J.

Good news for copyright purists is that the Court says the test of what constitutes copyright-protectable subject matter has not been affected by the much-criticised ruling of the Court of Justice of the European Union in Case C-5/08 Infopaq: "intellectual creation" in that ruling referred to the origin of a work, not its novelty or merit. On this basis, Proudman J's finding that headlines were capable of being original literary works was "plainly correct". She was also correct to conclude that even an 11-word extract of a larger work was capable of being a substantial part of it.  Reproduction of a work through the involvement of a "voluntary human process" in accessing a webpage failed to satisfy the criteria of the 'temporary and transient copying' defence.  The other grounds of appeal failed too.  Proudman J's judgment was described as "clear, careful and comprehensive". However, the Court of Appeal felt that her declaration had been drawn too widely, since not every copying of every headline or 'scraping' would, on the facts, constitute a copyright infringement.

Early reaction to the decision has been predictable. Thus, in a media release issued shortly after the decision was handed down, Toby Headdon (BLP, for the copyright owners) is quoted as saying:

"Following some pretty trenchant and perhaps misguided criticism by opponents of the NLA's scheme, the Court of Appeal has set the record straight not least by dispelling the notion that the copyright exception for temporary copies made as part of a technological process provides Internet users with a carte blanche to access material on a website as they please". 

When the trial decision was made public, the IPKat commented that the ruling was an inevitable consequence of the fact that copyright infringement is broken down into so many restricted acts, each of which can constitute infringement even if they closely follow the performance of a permitted act by a licensed person -- but that is in the nature of the right itself.  While he can see that customers may feel peeved that they need a licence to have their own copy of extracts which are made under licence themselves and which they've paid for, he can also see why newspaper proprietors are desperate to turn opportunities such as this into a sort of 'last chance saloon' for coaxing a little more income out of a news provision service that is increasingly harder to finance and run profitably.  Merpel added that, within a few years, the availability of increasingly improved search engines and better techniques for harnessing them will lead many current customers of media monitoring services to do their own self-monitoring. She still thinks this is a likely development, though the availability of licences on reasonable terms may make current customers happier to stay with the status quo.

STOP PRESS: the court's ruling is now available on BAILII, here.