A lawsuit could change the world of video highlights!

Wazee Digital has filed a lawsuit against DraftExpress that could change the world of video highlights.

DraftExpress is a website that focuses on NBA Draft prospects. They publish basketball player profiles, videos, and scouting reports on those players. These player profiles are accessible for free and don’t require any kind of registration. The lawsuit uses the player profile of DeAndre Daniels as an example.

The profile assesses how well Daniels projects to play in the NBA (this was back in 2014). Also, it includes a 12-minute, 24-second video that blends a series of short highlights of Daniels playing at UConn with graphics discussing Daniels’s strengths and weaknesses.

That profile on Daniels is now the subject of a federal lawsuit. And it is a lawsuit that could impact how websites show highlight video clips of athletes.

Wazee Digital, a technology company that licenses video footage for the NCAA, has sued DraftExpress for copyright infringement. The lawsuit, filed in the U.S. District Court for the Eastern District of New York back in April, highlights the DraftExpress profile on Daniels to assert that DraftExpress has knowingly—and without Wazee’s consent—used video content that Wazee had registered with the U.S. Copyright Office.

Benefiting Wazee is that courts have held that copyright law protects sports broadcasts. This dynamic ensures that the NCAA, as well as professional sports leagues, can earn substantial revenue from licensing rights to broadcast games.

Yet copyright protection in a broadcast does not, by itself, prevent DraftExpress from legally using portions of the content. To that end, DraftExpress asserts that its use of copyrighted broadcasts is through “fair use.” Generally speaking, the legal doctrine of fair use permits copying of protected material for certain uses. When fair use applies, the copying party need not obtain permission or submit payment to the party in possession of the copyright.

Although fair use analysis is somewhat subjective, federal law and the U.S Supreme Court have identified five basic factors. None of these five factors is necessarily more influential than the other and they are usually balanced against each another.

Purpose of copying

The first factor is the purpose of the copying. When the intent is for news reporting and sharing of information, fair use is more likely to apply. However, copying motivated by the pursuit of money is less likely to gain protection.

Nature of the original work

The second factor is the nature of the original work. In this instance, the original work consists of videos copyrighted by Wazee. The more creative the original work, the more protection it tends to gain. In contrast, the more factual the original work, the less protection applies.

Substantiality of copying

The third factor is the extent and substantiality of copying. A person who engages in unauthorized copying is more likely to gain protection under fair use if the amount of copying is relatively minimal. DraftExpress stresses that its video of Daniels consists of only 66 seconds of copyrighted video from game broadcasts that are several hours long.

Does the copying impact the marketplace?

Fourth is how the relevant copying impacts the marketplace. Wazee contends that DraftExpress has caused the company to lose licensing fees that it believes DraftExpress owes. If DraftExpress can use such video without paying, DraftExpress is arguably diluting the value of Wazee’s broadcast licenses. After all, such a practice could encourage other websites to copy Wazee’s broadcasts without permission or pay.

Derivative work

Finally, the fifth factor is whether the “derivative work” (i.e., DraftExpress scouting videos) is sufficiently transformative from the original work. The U.S. Supreme Court has recognized so-called “transformative use.” The basic idea is that the derivative work uses the original work in such a distinct way that it becomes “transformed” into a different kind of work. DraftExpress’ legal filings suggest the company is confident it will prevail based on the transformative factor. Expect attorneys for Wazee to counter this by insisting that graphic overlays and similar adjustments do not alter the underlying — and copyrighted — video of Daniels playing at UConn.

Like any lawsuit, Wazee vs. DraftExpress could settle at any time. But if it proceeds toward a trial, its outcome would be important to anyone who posts highlight videos online and earns money by doing so. This is especially relevant for those who have monetized their YouTube accounts but it could also impact professional players and their basketball agents who are promoting these videos to a global audience.