Richardson v. Townsquare Media, Inc.

In lawsuit over online news publication’s use of videos of Michael Jordan and rapper Grandmaster Melle Mel, Second Circuit vacates dismissal of claims pertaining to Michael Jordan video, finding fair use could not be found at pleading stage and de minimis doctrine did not apply, but upholds dismissal of claim involving Melle Mel video, finding YouTube’s terms of service permitted embedding that video in online article.

Delray Richardson, a professional videographer, brought copyright infringement claims against Townsquare Media Inc. for reproducing two of his videos—a 42-second video of basketball superstar Michael Jordan breaking up a fight and an interview with Grandmaster Melle Mel published on YouTube in which the rapper criticized fellow rapper Eminem—in articles in Townsquare’s hip-hop news website XXL and for using screenshots from those videos as headline background images in its articles.

Townsquare moved for judgment on the pleadings, arguing that (1) its use of the Jordan video constituted fair use, (2) it published the Melle Mel video pursuant to a license in YouTube’s terms of service, and (3) its use of screenshots was de minimis and therefore not actionable. The district court granted Townsquare’s motion in full, and Richardson appealed.

The Second Circuit vacated the district court’s judgment as to the Michael Jordan video and the screenshots, finding the lower court misapplied the fair use doctrine as to the video and the de minimis doctrine as to the still images. The appellate court affirmed the district court’s dismissal of the claims related to the Melle Mel video, finding that YouTube’s terms of service grant a nonexclusive license to other users to embed videos using the platform’s tools.

In 2015, Richardson recorded what appeared at the time to be an unremarkable event involving a superstar: Michael Jordan breaking up a fight between two people—one of his bodyguards and someone Richardson called “a gang member”—and walking to his car. Though the Jordan video received limited attention when it was first published, public interest piqued in July 2023, when the hip-hop blog DailyLoud shared the full video on its X account, claiming to identify individuals involved at the scene as rapper Wack 100 (the so-called gang member) and YouTube personality Charleston White. Following the DailyLoud post, White denied involvement in the altercation and Townsquare published an article detailing the controversy on its XXL website. Townsquare’s article embedded the DailyLoud X post, which included the entire Jordan video, and used a screenshot from the video as the background for the article’s headline.

In 2023, Richardson, along with an entity known as The Art of Dialogue, recorded the Melle Mel interview, and The Art of Dialogue posted a three-minute excerpt from the interview with a title that suggested the rapper questioned Eminem’s rap capabilities and asserted his fame was because of his race. Townsquare later published an article on XXL covering the release of the Melle Mel video and embedding the video from The Art of Dialogue’s YouTube channel. The Townsquare article also included a screenshot from the video juxtaposed with Eminem as the background for the article’s heading. Townsquare also published a follow-up story about rapper 50 Cent’s defense of Eminem following Melle Mel’s comments, which again embedded the Melle Mel video and included a different screenshot behind the headline.

On appeal, the Second Circuit noted that the fair use analysis using the four factors from the Copyright Act “is an open-ended and context-sensitive inquiry” that courts most often, but not exclusively, undertake at the summary judgment stage. While there is “the possibility of fair use being so clearly established by a complaint as to support dismissal of a copyright infringement claim” at the pleading stage, “to warrant dismissal of a complaint, the fair use factors must point decisively in the defense’s favor.” In reviewing the dismissal de novo, the appellate court concluded that the district court erred in its assessment of three of the four factors and that dismissal on fair use grounds was not appropriate at the pleading stage.

The panel determined that the first factor—the purpose and character of the work—was “at best, neutral” in the fair use analysis, finding that the question of transformativeness was a “closer call” than the district court’s analysis suggested. Although Townsend republished the Jordan video in an article describing the controversy around the video, Townsquare’s reporting appeared primarily focused on the mere existence and presentation of the video itself rather than the commentary surrounding the individuals involved in the altercation. The court likewise noted that the district court erred by failing to consider the commercial nature of the publication, observing that it was undisputed that Townsquare is a for-profit entity that ran advertising alongside the video.

As to the second factor—the nature and character of the work—the panel found the Michael Jordan video was largely factual and did not involve meaningful creative choices, agreeing with the district court that this factor, “though of limited import,” weighed in favor of fair use. With respect to the third factor—the amount and substantiality of the use—Townsquare conceded that it republished the Michael Jordan video in its entirety but contended that such use was necessary. The panel found that Townsquare’s arguments were premature and underdeveloped at the pleading stage and concluded that Townsquare had reasonable alternatives in publishing this story, including through publishing the text of the article with only a portion of the video or simply including a hyperlink. Townsquare could not demonstrate that its use was reasonable relative to its reporting purposes.

The panel viewed the final factor—the effect of the use on the potential market for or value of the copyrighted work—as the most important one. In this case, it was plausible that viewers who could see the entire Jordan video on Townsquare’s platform would have little reason to seek out the video from Richardson, which would cause Richardson market harm through either lost advertising revenue or lost rental/purchase revenue. Because Townsquare did not show that its use of the Jordan video was not a market substitute for the Jordan video itself, this factor weighed against a finding of fair use.

The panel likewise vacated the district court’s judgment as to Townsquare’s use of the screenshots from the Jordan video, finding that the de minimis doctrine had no application here. Although the district court referred to the de minimis doctrine as a defense, the panel explained that this doctrine is not a special case of fair use or some other affirmative defense but rather an example of a plaintiff’s failure to present a prima facie case of infringement. Here, Townsquare prominently displayed the screenshots as the background to the headline in each article and included the screenshots to signal to readers the topics of the articles, and the panel determined that such use was observable and not de minimis.

Finally, with respect to the Melle Mel video, the Second Circuit affirmed the district court’s finding that Townsquare had a valid license defense for embedding the video based on YouTube’s terms of service. When The Art of Dialogue uploaded the Melle Mel video to YouTube, it gave YouTube permission to sublicense the video to Townsquare. The sublicense authorized Townsquare to republish the YouTube video via embedding. The panel rejected Richardson’s arguments that the license or sublicense was conditioned on Townsquare’s compliance with various other YouTube policies, as those policies were covenants between YouTube and Townsquare that Richardson could not enforce.

Summary prepared by Tal Dickstein and Elena De Santis