Media monitoring service Meltwater infringed on Associated Press copyright in the course of providing excerpts of news stories in search results for clients, a federal judge said March 20.

PR service and media monitoring providers, some of which operate like Meltwater in the gray area of fair use doctrine, have closely watched the suit filed last year by the AP.

In a 91-page decision that includes a detailed description of the nuts and bolts of online news monitoring, Judge Denise Cote of U.S. District Court for the Southern District of New York said Meltwater competes with the AP and its licensees for business, including monitoring competitors like BurrellesLuce, Cision, LexisNexis, and Google News, which all hold AP licenses while Meltwater does not.

Cote found that Meltwater's use was not "transformative," as required under fair use doctrine, noting "Meltwater copies AP content in order to make money directly from the undiluted use of the copyrighted material," and that Meltwater's own marketing materials "convey an intent to serve as a substitute for AP's news service."

Cote said that while commercial news clipping services like Meltwater perform an important function for clients, the public interest of such a business does not outweigh "the strong public interest in the enforcement of copyright laws or justify allowing Meltwater to free ride on the costly news gathering and coverage work performed by other organizations."

Meltwater vows an appeal.

"We're disappointed by the court’s decision and we strongly disagree with it," said CEO Jorn Lyseggen. "We're considering all of our options, but we look forward to having this decision reviewed by the court of appeals, which we are confident will see the case a different way."

Meltwater contends that its monitoring service operates under fair use like a search engine in that it displays excerpts of information displayed publicly online. But Cote said the service, unlike a search engine, is not public and did not show that it directs users to the original source of content.

Cote highlighted a paltry click-thru rate -- .05% was suggested in some cases -- for links in Meltwater's summaries, noting the service did not show it drives traffic to the original websites of the news articles. "Instead of driving subscribers to third-party websites, Meltwater News acts as a substitute for news sites operated or licensed by the AP," wrote the judge.

Articles 'Scraped'

The AP suit centered on 33 articles "scraped" by Meltwater's service and delivered to customers through thousands of excerpts, often the first few lines of a story.

Dawn Conway, executive VP for customer experience and global content licensing for Cision, which holds an AP license and is unaffected by the ruling, said the structure of an AP news article is unique because it puts so many details in the first paragraph. "The AP, in contrast to other publishers, delivers 'the heart of the story' in the lead and therefore the lead can be a substitute for full text," she said.

Conway was hired last year from LexisNexis after Cision reached an out-of-court settlement with Dow Jones over alleged copyright infringement that cost the monitoring company about $6.5M in fees, production changes and the payout to DJ.

In the Meltwater case, the AP sued on four counts of copyright infringement, as well as "hot news" misappropriation, and removal or alteration of copyright management information. Meltwater counterclaimed for the court to declare its use okay, as well as for a count each of libel per se and tortious interference with business relations.

The suit drew interest from prominent advocates on both sides. Meltwater, which began offering news monitoring in 2005, was backed by the Electronic Frontier Foundation and Public Knowledge, which received legal help from Stanford Law School's Center for Internet and Society.

On the AP side, an amicus brief was filed by the New York Times, Gannett, McClatchy, BurrellesLuce, the Newspaper Association of America and Advance Publications.

BurrellesLuce, which acquired Cision's print monitoring operation after the DJ episode last year, in the brief noted that it is at a "significant competitive disadvantage" because it pays license fees to publishers, adding that it "expects and hopes the resolution of this dispute will eliminate that disadvantage and make the rules of the copyright road plain, while strengthening the economic health of AP and other news organizations on which it depends for the provision of its own services."