Full opinion text
DENISE COTE, District Judge: This Opinion addresses cross-motions for summary judgment filed by The Associated Press (“AP”), a news cooperative, and Meltwater U.S. Holdings Inc., Melt-water News U.S. Inc., and Meltwater News US1 Inc. (collectively “Meltwater”), an Internet media monitoring service. In this action, AP principally contends that Meltwater is infringing AP’s copyright in its published news stories. Meltwater uses a computer program to scrape news articles on the web and, among other things, provides excerpts of those stories, including many AP stories, in reports it sends each weekday to its subscribers. Meltwater does not dispute that it has taken expressive content from AP stories that is protected by the Copyright Act, but has interposed five defenses to AP’s copyright infringement claim. Meltwater’s principal defense against the infringement claim is that its excerpting of AP news stories is a fair use. Even though Meltwater’s service is a closed system for subscribers only, Meltwater equates itself with Internet search engines. It argues that search engines transform the work they take from Internet news sites by using that content for a new purpose, that is, as an integral part of an information-location tool. According to Meltwater, this transformative purpose qualifies as a fair use of the copyright-protected material. It will be assumed for purposes of this Opinion that Internet search engines are a transformative use of copyrighted work. Nonetheless, based on undisputed facts, AP has shown that it is entitled to summary judgment on its claim that Meltwater has engaged in copyright infringement and that Meltwater’s copying is not protected by the fair use doctrine. This Opinion begins with a description of the facts taken from the parties’ submissions on these cross-motions for summary judgment. The facts are largely undisputed; where there are factual disputes, those will be noted. Following a description of AP’s business as it relates to these claims, and then Meltwater’s, there will be a brief description of the procedural history of this lawsuit. The next sections of the Opinion will analyze the legal issues. They will include a discussion of Meltwater’s five affirmative defenses to the claim of copyright infringement: fair use, implied license, equitable estoppel, laches, and copyright misuse. Finally, this Opinion will address Meltwater’s motion for summary judgment on AP’s secondary infringement claims and some of Meltwater’s evidentiary objections. BACKGROUND I. AP AP was established in 1846; it is owned by over 1,400 newspapers across the United States and employs a staff of approximately 3,700 people. On any given day it produces between 1,000 and 2,000 news articles. Each article is the result of a process that involves a number of creative decisions by AP reporters and editors. First, AP must select the topic to be covered in the article. The selection process can involve sifting through numerous press releases, comments made by politicians, and news tips received by AP in order to decide which topics are worthy of coverage. The actual writing of the story is often an iterative process, involving consultations between the reporter and editor about how to handle the assignment. During this process, the articles are reviewed for “completeness, clarity, balance and accuracy.” The structure of a news article is itself the product of strategic and stylistic choices. For instance, breaking news stories are traditionally organized in the form of an “inverted triangle.” The purpose of the “inverted triangle” structure is to include “as much key information as possible in the ‘lede,’ or first portion of the story.” As AP’s Standards Editor has explained, an AP story lede “is meant to convey the heart of the story, rather than serving as a teaser for the remainder of the story.” In connection with this action, the AP obtained copyright registrations for thirty-three of its articles (“Registered Articles”). The news products that AP offers take many forms. For instance, subscribers can choose to subscribe to a regional news product, like AP’s Latin American News, or Asia-Pacific News. Alternatively, a subscriber can select an AP product that is focused on a particular industry, like AP’s Business Alert, Defense Alert, or Technology Alert. Each of the thirty-three Registered Articles at issue in this lawsuit was written by an AP reporter. Most of articles authored by AP reporters are published by its members or licensees and not by AP itself. Thus, a principal component of AP’s revenue comes from licensing fees it earns by licensing uses of its news products to its roughly 8,000 licensees. AP earns hundreds of millions of dollars in licensing fees annually. In the digital age, AP’s license agreements have expanded to permit the publication of its articles on the Internet. AP’s license agreements with its digital and commercial clients account for more than $75 million of AP’s annual gross revenue. Many of the websites on which AP content appears permit readers to access the articles without paying any fee. AP’s licensing agreements are crafted around the kind of redistribution rights the licensee wishes to have. For instance, AP’s licensing agreements with LexisNexis and Factiva permit those services to give their customers access to full AP articles and to search through AP’s archives. AP also has licensing agreements that permit the distribution of excerpts from or snippets of its articles. The license agreements between AP and three news clipping services that are competitors of Meltwater are examples of this kind of license. One such license granted the Internet news clipping service a license to distribute “AP text scraped from third party AP licensee websites (“AP Articles”) ... as well as links to AP Articles and excerpts of AP Articles.” In a second such license, AP permits the Internet news clipping service to redistribute “Snippets” of AP articles “as a part of an aggregated feed of licensed content,” to a primary market of Media Monitoring & Evaluation companies who cater to “Internal corporate communications and PR professionals and their external agents.” This license defines “Snippets” to mean “headlines and leading 140 characters from AP content.” In a final example, the licensing agreement allows the news clipping service to make available directly or via its affiliate “snippets of [certain AP content] in response to search requests.” AP also offers a web-based platform known as AP Exchange to its licensees, which permits the licensees to search AP articles by keywords. Each AP article contains metadata tags. These tags attach to certain information appearing in AP articles including people, companies, geographic locations, and organizations. Through AP Exchange, customers can run either simple or advanced searches to locate AP news stories. This platform also allows AP’s customers to save their searches and to receive search results on an ongoing basis. AP’s customers can receive email alerts when an article that is responsive to one of their custom searches has been published. In addition, AP has licensed its content to customers that, in turn, permit their users to search for AP articles using keyword search terms. II. Meltwater News Meltwater is an international “software as a service” (“SaaS”) company that operates in twenty-seven countries. It was founded in 2001 in Norway. Its united States subsidiaries currently have four hundred employees, nine U.S. offices, and an annual income of [REDACTED] of dollars. In 2005, Meltwater began offering a news monitoring service to subscribers in the United States called Meltwater News. Meltwater News now has more than 4,000 customers in the United States. Its U.S. customers are businesses, non-profit organizations, and government agencies. An annual subscription fee costs thousands of dollars. Meltwater News subscribers have access to Meltwater’s “Global Media Monitoring” product, which offers a suite of online services. The Global Media Monitoring product enables users to monitor the news based on the presence of certain words or phrases in news articles appearing on the Internet and to receive excerpts of those news articles. Meltwater uses automated computer programs or algorithms to copy or “scrape” an article from an online news source, index the article, and deliver verbatim excerpts of the article to its customers in response to search queries. Through this automated mechanism, Melt-water copied each of the thirty-three Registered Articles at issue in this litigation and delivered excerpts from them to subscribers. Meltwater markets its services to communications and public relations professionals as a tool that will assist them in locating “mentions” of their businesses in the media, in tracking their company’s press releases, and in conducting comparative research. Some of Meltwater’s marketing materials and sales representatives also advertise Meltwater News as a useful tool for staying informed of general news developments. One Meltwater sales representative described Meltwater News as “providing] the most news in the most efficient manner” and referred to the Melt-water News Reports as “customized news digest[s].” Another Meltwater employee has recommended telling customers that a Meltwater News excerpt “saves you time so you don’t have to read the full article.” Meltwater competes with AP and its licensees for business. Meltwater identifies companies and services like LexisNexis, Cisión, Google News, and Burrelles-Luee as its competitors. Each of these companies has held an AP license. Melt-water has succeeded in winning what it described as a “mega-contract” away from an AP licensee, and both AP and Meltwater have submitted bids to the same potential customers. In 2010, for instance, both AP and Meltwater submitted proposals to the House of Representatives in response to an “official solicitation for proposals to provide web based delivery of local, national and international news.” Like Internet search engines, Meltwater News employs automated computer programs known as “crawlers” to scan the Internet for news. Meltwater’s crawlers scan approximately 162,000 online news websites from over 190 countries each day to create an index of the websites’ content. The program usually crawls a news website at roughly [REDACTED] intervals. Most of these websites make their articles available to readers without charge. The crawlers extract and download content from the websites. The downloaded content is organized into a structured internal format that has seven fields, including a timestamp reflecting when the document was first seen by the crawler. The extracted content is then placed in a queue for indexing. Using an Application Programming Interface or API, an index is created that links or “maps” most of the words in the document to the document. A. News Reports Meltwater’s creation of the index permits its subscribers to search for and request delivery of information that is responsive to their search queries. Its subscribers can conduct two types of searches of the index. First, a customer can use the Meltwater News platform to set up standing search queries known as “agents.” An agent is a single string of words or phrases that will be used in searching Meltwater’s index of online news content. For example, a customer interested in obtaining information on education policy might create an agent that reads: “(“teachers” or “students”) and education* and policies.” The creation of an agent query allows the particular search to be conducted automatically on a recurring basis. A basic subscription offers a customer the ability to create five standing agent queries. Customers receive agent search results in two ways. Most customers receive emails every weekday that contain the excerpts responsive to their standing search requests. These are labeled “News Reports.” Customers can also view those same search results by logging onto their Meltwater News online account, where they can see all of their News Reports from the last seven months. A typical News Report takes the following form. At the top of the News Report a banner appears that reads “News Report from Meltwater News.” Directly beneath the banner appears a table entitled “Report Overview.” The Table ordinarily consists of two columns; the first column contains the name of the “agent” query that retrieved hits; the second displays the raw number of hits in a given period of time (such as 8 in 1 day, or 635 in 23 hours). The actual search results follow the Report Overview. They are organized in subcategories based on the agent query to which they respond. Within each agent category, the results appear in reverse chronological order, with the excerpt of the most recently published article appearing first. Three icons appear next to each search result; they read, “Translate,” “Share,” and “Archive.” AP articles account for over a third of the search results in some News Reports. Each search result in the News Report generally includes the following text: (1) the headline or title of the article and a hyperlink to the URL for the website from which the article was indexed; (2) information identifying the article’s source, such as the publisher and the country of origin; and (3) usually two excerpts from the article. The first excerpt consists of up to 300 characters (including white space) from the opening text of the article or lede. The second excerpt is shorter and is known as the “Hit Sentence.” It is approximately 140 characters (not including white spaces) “surrounding a single, algorithmically chosen appearance of one of the customer’s matched search keywords.” If the keyword appears in the lede, then the lede is repeated twice. On occasion, the hyperlink to the article no longer leads to the article because the article has been removed from the web. Meltwater contends that when that occurs, the hyperlink will lead the Meltwater subscriber to the website where the article originally appeared, and the reader will see whatever content the operator of the webpage has chosen to display in place of the original article. B. Analytics A Meltwater News subscriber can choose to have certain charts and graphs included in their News Reports. These charts and graphs — known as “Dashboard Analytics” or “Mail Analytics” — provide additional information about the search results. For instance, customers who opt to have Mail Analytics included in their daily News Report will see a pie chart showing the three or four countries that have had the highest coverage of a particular agent. They also have a choice of seeing an “up- and-down coverage” chart that indicates whether the volume of coverage has gone up or down during a certain period of time, or a “word cloud” illustrating certain buzz words appearing in the search results. A subscriber can also view additional analysis of its agent searches by logging on to the Meltwater News platform. When it logs on, it encounters a “dashboard” page containing five tools; some of these tools overlap with the tools that can be delivered in the News Reports. Using the dashboard, the customer can view (1) a “tone analysis” tool, which analyzes whether the tone of the news coverage is negative, positive, or neutral; (2) a “word cloud” graphic, which illustrates the frequency with which a keyword appears in the search results; (3) a list of the “top publications” providing the most coverage of a given agent query; (4) an “up-and-down trend analysis” chart, which indicates “whether the volume of media coverage related to a given search query has increased or decreased over a given period;” and (5) a map that illustrates the “geographical distribution of relevant news coverage.” C. Ad Hoc Searches The second way in which customers can conduct searches of the Meltwater News index is through an “ad hoc” search. To perform an ad hoc search, a Meltwater News subscriber logs on to its Meltwater account, clicks on a “Search” tab, and types in keywords of its choice. Ad hoc searches do not generate News Reports, but the format for presenting the results generated by an ad hoc search is identical to that in News Reports. The results of ad hoc searches are not saved on the Meltwater system unless the subscriber saves them to the subscriber’s own archive folder. There is no limit on the number of ad hoc searches that a subscriber can perform. D. Archiving A subscriber with a basic subscription has the ability to archive material in two ways. First, subscribers can archive any of their search results in a personal archive stored on Meltwater’s database. For instance, as described above, an “Archive” button appears next to each excerpt contained in a Meltwater News Report. Clicking this button archives the search result. When a search result is archived in this way, the information stored in the archive includes (1) the headline or title of the article and the URL link; (2) a description of the source of the article; (3) an excerpt of the article, consisting only of the opening text; and (4) any text the user has typed or pasted into a comment box. In other words, the Hit Sentence is not automatically archived. Second, Meltwater offers a tool called “Article Editor” that is accessible from the Meltwater News online platform. Clicking on the Article Editor tool causes a pop-up window to appear. The window contains boxes with the labels “Date, Title, Opening Text, Body Text, URL, Name of Publisher, and Country.” The subscriber can type text into these boxes or can copy and paste text from other websites. For instance, if a customer clicks on a hyperlink provided as part of a search result, the customer can proceed to copy the article from the publishing website and paste the text into the Article Editor. The text can be saved in an “external archive folder” on Meltwater’s system for as long as the subscriber remains a customer. E. Newsletter and Newsfeed For an additional fee, Meltwater News assists its subscribers in creating their own newsletters. Material that has been saved in a subscriber’s archive folder— search results or material entered into the Article Editor — can be incorporated into a “Newsletter” and sent to third-party recipients. Alternatively, subscribers can elect to have their search results incorporated into a Newsfeed on their internal or external website. Meltwater describes the News-feed as a “dynamic list of search results, including links to full articles.” III. The Thirty-Three Registered Articles Meltwater delivered excerpts of each of the thirty-three Registered Articles to its customers in News Reports as a result of agent searches. Meltwater scraped the Registered Articles from roughly 1,200 websites — including the websites of AP’s licensees and AP Hosted, which is a private label website where AP hosts content for its members. Twenty-four of the thirty-three articles were published within six months of the date Meltwater responded to a discovery request in this action. As a result, Meltwater was able to calculate from its records that it made at least 22,297 excerpts from the twenty-four Registered Articles available to its customers in the United States in response to agent queries. The parties have not calculated the percentage of each original AP news story that was excerpted and delivered in each of the News Reports, but it probably ranged from as low as 4.5% to slightly over 60%. There are several factors that affect the calculation of the percentage. One is the length of the Registered Article. The average length of the full text of the thirty-three Registered Articles is 2,571 characters (not including spaces), or 504 words. But, some of the articles are short and some are long; they vary in length from 75 words to 1,321 words. Moreover, if the keyword that is searched appears in the lede, then the lede and Hit Sentence will overlap. AP has shown that with respect to some of the Registered Articles, a single Meltwater excerpt consisted of more than 30% of the text of the article and in at least one instance it constituted 61% of the article’s text. For example, from the shortest Registered Article — entitled “Modern pentathlon tightens anti-doping policy” — Meltwater delivered the following excerpt: MONACO (AP) — Modern pentathlon has joined other sports in adopting a “no needles” policy as part of its anti-doping rules ahead of the 2012 London Olympics. ... says athletes can receive injections only from a “certified medical professional” after an appropriate diagnosis and only if there is no alternative. The full text of the Registered Article reads as follows: MONACO (AP) — Modern pentathlon has joined other sports in adopting a “no needles” policy as part of its anti-doping rules ahead of the 2012 London Olympics. Governing body UIPM says athletes can receive injections only from a “certified medical professional” after an appropriate diagnosis and only if there is no alternative. The UIPM says all injections must be reported to competition doctors. Governing bodies in cycling, gymnastics and rowing have also introduced “no needles” rules this year. Some of Meltwater’s customers have received multiple excerpts from the same AP article, apparently in a single News Report. In such instances, the percentage of the article that is provided to the Meltwater customer may increase since the Hit Sentence in the various excerpts can change. Excerpts from the Registered Articles were also included in ten Newsletters created by Meltwater customers in the United States. There is no evidence, however, that any Meltwater subscriber used the Meltwater Newsletter feature to cut and paste a complete copy of any of the thirty-three Registered Articles into its customized newsletter. Finally, Meltwater subscribers only clicked on the hyperlinks for seven of the thirty-three Registered Articles. The average click-through rate for the thirty-three Registered Articles is roughly 0.08%. Meltwater has not provided any information on any other measure of its click-through rates. PROCEDURAL HISTORY On February 14, 2012, AP filed this action against Meltwater. AP’s amended complaint asserts six causes of action with respect to the Registered Articles: (1) copyright infringement; (2) contributory copyright infringement; (3) vicarious copyright infringement; (4) declaratory judgment of copyright infringement; (5) “hot news” misappropriation under New York common law; and (6) removal or alteration of copyright management information. In response, Meltwater has raised four counterclaims: (1) declaratory judgment of non-infringement; (2) declaratory judgment of safe harbor from infringement claims based upon the Digital Millennium Copyright Act (“DMCA”); (3) libel per se; and (4) tortious interference with business relations. At a pretrial conference held on April 20, 2012, the Court proposed that the parties conduct an initial phase of discovery focused on Meltwater’s liability on AP’s copyright claims based on the nineteen articles identified in its original complaint. The parties thereafter agreed on a schedule that would permit them to focus on the core discovery needed to allow early briefing of the central legal issues in this case. At a May 11 conference, the Court determined that AP should be permitted to take targeted discovery not only of Meltwater’s alleged infringement with respect to the Registered Articles, but also broader discovery of Meltwater’s general practices and procedures. On July 13, AP filed an amended complaint in which it included fourteen additional articles — bringing the total number of Registered Articles at issue to thirty-three. Discovery proceeded on all thirty-three articles and broader issues to permit the parties to litigate through summary judgment practice the copyright infringement claim and Meltwater’s affirmative defenses to that claim. Both sides filed the instant cross-motions for summary judgment on November 9. AP and Meltwater both move for summary judgment on Meltwater’s fair use defense. AP has also moved for summary judgment on Meltwater’s implied license defense. Each of Meltwater’s affirmative defenses is implicated by this motion practice since Meltwater also contends that there are triable issues of fact on its affirmative defenses of implied license, equitable estoppel, laches, and copyright misuse that prevent summary judgment from being entered for AP. Meltwater has also moved for summary judgment on AP’s contributory and vicarious copyright infringement claims. These motions were fully submitted on January 23, 2013. Redacted sets of these motion papers were publicly filed in December 2012 and January 2013. The defendants also filed on December 26, 2012 and January 24, 2013, two motions to strike certain declarations submitted by the plaintiff and the plaintiffs Fed. R.Civ.P. 56.1 Statement. Three amici curiae briefs were accepted for filing. Computer & Communications Industry Association (“CCIA”) represents that it is not filing in support of either AP or Meltwater. Electronic Frontier Foundation and Public Knowledge have filed in support of Meltwater; the New York Times Company, Advance Publications, Inc., Gannett Co., Inc., the McClatchy Company, the Newspaper Association of America, and BurrellesLuee have filed in support of AP (“New York Times, et ah”). DISCUSSION The parties have cross-moved for summary judgment. Summary judgment may not be granted unless the submissions of the parties taken together “show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Rule 56(c), Fed.R.CivP. The moving party bears the burden of demonstrating the absence of a material factual question, and in making this determination the court must view all facts in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Azrielli v. Cohen Law Offices, 21 F.3d 512, 517 (2d Cir.1994) (“[T]he court must resolve all ambiguities and draw all reasonable inferences in favor of the non-moving party.”). When the moving party has asserted facts showing that the nonmovant’s claims cannot be sustained, the opposing party must “set forth specific facts showing that there is a genuine issue for trial,” and cannot rest on the “mere allegations or denials” of his pleadings. Rule 56(e), Fed.R.Civ.P. See also Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir.1995). In deciding whether to grant summary judgment, therefore, this Court must determine (1) whether a genuine factual dispute exists based on the evidence in the record, and (2) whether the fact in dispute is material based on the substantive law at issue. In this case, the substantive law governing the parties’ dispute is found in the law of copyright. The Copyright Act of 1976 invests a copyright holder with a bundle of exclusive rights. 17 U.S.C. § 106 et seq. This bundle consists of the rights to “reproduce, perform publicly, display publicly, prepare derivative works of, and distribute copies of’ the copyrighted work. Arista Records v. Doe 3, 604 F.3d 110, 117 (2d Cir.2010); see also 17 U.S.C. § 106. “The principle purpose of the Copyright Act is to encourage the origination of creative works by attaching enforceable property rights to them.” Matthew Bender & Co., Inc. v. West Pub. Co., 240 F.3d 116, 122 (2d Cir.2001). To prevail on a claim of copyright infringement, “two elements must be proven: (1) ownership of a valid copyright, and (2) copying constituent elements of the work that are original.” Arista Records, 604 F.3d at 117 (citation omitted). A certificate of copyright registration is prima facie evidence of both valid ownership of copyright and originality. See Scholz Design, Inc. v. Sard Custom Homes, LLC, 691 F.3d 182, 186 (2d Cir.2012); see also Boisson v. Banian, 273 F.3d 262, 268 (2d Cir.2001). The copying of the constituent elements of the work that are original can be established through direct or indirect evidence. Boisson, 273 F.3d at 267. The reporting of facts is not protectable under the Copyright Act since facts are “never original to an author.” Nihon Keizai Shimbun, Inc. v. Comline Business Data, Inc., 166 F.3d 65, 70 (2d Cir.1999). But compilations of facts may be protected under the Act since the arrangement or presentation of facts “can display originality.” Id. There is even more room for originality in descriptions of facts. Id. Thus, news articles may be entitled to protection under the Copyright Act to the extent they contain original expression. Id. AP has carried its burden to show both its ownership of a valid copyright in the Registered Articles and Meltwater’s copying of protected elements of those works. Meltwater does not contest this showing, but relies instead on five affirmative defenses. Its principal defense is that it made fair use of the Registered Articles. It also contends that there are triable issues of fact that require a trial as to four additional defenses: its possession of an implied license, estoppel, laches, and copyright misuse. Each of these defenses will be addressed in turn, but none of them prevents the issuance of summary judgment in AP’s favor based on its copyright claim. I. Fair Use Meltwater contends that its use of the Registered Articles is fair because Melt-water News functions as an Internet search engine, providing limited amounts of copyrighted material to its subscribers in response to their queries and thereby pointing its subscribers to a source of information online. It contends that this service is transformative of the original works. Based on undisputed evidence, Meltwater’s fair use defense fails. Notwithstanding the copyright protections guaranteed by Section 106 of the Copyright Act, the law of copyright recognizes the need for “breathing space.” Campbell v. Acuff-Rose Music, 510 U.S. 569, 579, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994); see also On Davis v. The Gap, Inc., 246 F.3d 152, 174 (2d Cir.2001). Thus, even where a plaintiff has established a prima facie case of copyright infringement, liability is excused where the defendant demonstrates that he made “fair use” of the plaintiffs copyrighted work. Because fair use is an affirmative defense, the burden of proof rests with party relying on the defense. Infinity Broadcast Corp. v. Kirkwood, 150 F.3d 104, 107 (2d Cir.1998). The availability of a fair use defense permits courts to avoid the “rigid application of the copyright statute” when “it would stifle the very creativity which the law is designed the foster.” Campbell, 510 U.S. at 577, 114 S.Ct. 1164. The fair use doctrine, although of common law origin, has been codified at 17 U.S.C. § 107. This section provides that [njotwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work ... for purposes such as criticism, comment, news reporting, teaching ... scholarship, or research, is not an infringement of copyright. 17 U.S.C. § 107. The applicability of the fair use defense is a mixed question of law and fact. Bill Graham Archives v. Dorling Kindersley, Ltd., 448 F.3d 605, 608 (2d Cir.2006). The issue of fair use may be resolved on summary judgment where the court determines that there is no genuine dispute of material facts. Id. In determining whether a defendant has made fair use of the plaintiffs copyrighted work, the court is guided by four nonexclusive statutory factors: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. 17 U.S.C. § 107. No single factor is determinative. “All are to be explored, and the results weighed together, in light of the purpose of copyright.” Campbell, 510 U.S. at 578, 114 S.Ct. 1164. At bottom, “[t]he ultimate test of fair use is whether the copyright law’s goal of promoting the Progress of Science and useful Arts would be better served by allowing the use than by preventing it.” Bill Graham Archives, 448 F.3d at 608 (citation omitted). When these four factors are examined in light of the purpose of the copyright law, AP has shown through undisputed evidence that Meltwater’s copying is not protected by the fair use doctrine. Each of these four factors will be examined in turn. A. Purpose and Character of the Use The first factor of the fair use analysis poses a deceptively simple question. It asks whether the new work merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning or message; it asks, in other words, whether and to what extent the new work is transformative. Campbell, 510 U.S. at 579, 114 S.Ct. 1164 (citation omitted). A decision on whether a work is transformative need not be an all-or-nothing assessment. Nihon, 166 F.3d at 72. The inquiry asks not merely whether the new work is transformative, but also the extent to which it transforms the copyrighted work. “[T]he more trans-formative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.” Campbell, 510 U.S. at 579, 114 S.Ct. 1164. The inquiry into the transformative nature of the work is “guided by” the preamble to § 107, which directs attention to whether the use of copyrighted material is for the several listed purposes, among them news reporting and research. Id. at 578, 114 S.Ct. 1164. But, the list of fair uses included in the preamble of section 107 is only “illustrative.” Infinity Broadcast Corp., 150 F.3d at 107 (citation omitted). Nonetheless, “the illustrative nature of the categories should not be ignored.” Id. Of course, not all alterations of a copyrighted work are “transformative.” A “use of copyrighted material that merely repackages or republishes the original is unlikely to be deemed a fair use” and a “change of format, though useful” is not transformative. Infinity Broadcast Corp., 150 F.3d at 108 & n. 2 (citation omitted). On the other hand, if copyrightable expression in the original work is used as “raw material, transformed in the creation of new information, new aesthetics, new insights and understandings — this is the very type of activity that the fair use doctrine intends to protect for the enrichment of society.” Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1111 (1990); see also Castle Rock Entm’t, Inc. v. Carol Publ’g Group, Inc., 150 F.3d 132, 142 (2d Cir.1998). In considering whether the second work has transformed the original, it is appropriate to consider the percentage of the allegedly infringing work that is made up of the copyrighted work since this offers some indication of whether the defendant’s use of the “original materials has been sufficiently transformative.” Bill Graham Archives, 448 F.3d at 611. Another aspect of the first fair use factor is the extent to which the new work has a commercial or non-profit educational purpose. The commerciality of the use must be considered with care. After all, not-for-profit enterprises may infringe copyrights, and conversely, if commerciality carried presumptive force against a finding of fairness, the presumption would swallow nearly all of the illustrative uses listed in the preamble paragraph of § 107, including news reporting, comment, criticism, teaching, scholarship, and research, since these activities are generally conducted for profit in this country. Campbell, 510 U.S. at 584, 114 S.Ct. 1164 (citation omitted). The fact that a given use is profit-driven is not the focus of the commerciality inquiry. Instead, the “crux of the profit/nonprofit distinction is ... whether the user stands to profit from the exploitation of the copyrighted material without paying the customary price.” Harper & Row Publishers, Inc. v. Nation Enterp., 471 U.S. 539, 562, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985). Thus, the fair use doctrine “distinguishes between a true scholar and a chisler who infringes a work for personal gain.” Id. at 563, 105 S.Ct. 2218 (citation omitted). A determination of whether a use “exploits” a copyrighted work calls for a careful exploration of the link between the defendant’s precise use of the copyrightable elements of the plaintiffs work and the defendant’s financial gain. Where a defendant did not gain “direct or immediate commercial advantage” from the copying, its status as a for-profit enterprise is less relevant. Am. Geophysical Union v. Texaco, Inc., 60 F.3d 913, 921 (2d Cir.1994). Conversely, “when the copier directly and exclusively acquires conspicuous financial rewards from its use of the copyrighted material” a finding of fair use is less likely. Blanch v. Koons, 467 F.3d 244, 253 (2d Cir.2006). Of course, a use that generates value for the “broader public interest” weighs in favor of fair use. Id. In analyzing the purpose of the use, a court may consider as well other aspects of a defendant’s purpose. For instance, was the copying intended to supplant the copyright holder’s “commercially valuable right of first publication.” Harper & Row, 471 U.S. at 562, 105 S.Ct. 2218. As the term itself suggests, “[flair use presupposes good faith and fair dealing.” Id. (citation omitted). Neither the purpose nor use of the Melt-water News Reports, nor its excerpts from the Registered Articles in the News Reports, is transformative. Meltwater uses its computer programs to automatically capture and republish designated segments of text from news articles, without adding any commentary or insight in its News Reports. Meltwater copies AP content in order to make money directly from the undiluted use of the copyrighted material; this is the central feature of its business model and not an incidental consequence of the use to which it puts the copyrighted material. Thus, it is not surprising that Meltwater’s own marketing materials convey an intent to serve as a substitute for AP’s news service. Meltwater describes its Meltwater News products as “News at a glance” and “News brought to you.” They trumpet that “Meltwater News continuously tracks news sources, updating its database continuously throughout the day so searches return fresh, relevant content,” and advertise that “your news is delivered in easy to read morning and/or afternoon reports.” Nor is Meltwater’s taking of copyrighted material more defensible because its business relates to news reporting and research — two of the purposes of the fair use doctrine captured in the statute’s preamble. The news reporting and research upon which Meltwater relies was not done by Meltwater but by AP; the copyrighted material that Meltwater has taken is the news reporting and research that AP labored to create. For this same reason, the examination of the public interest weighs against Meltwater. Paraphrasing James Madison, the world is indebted to the press for triumphs which have been gained by reason and humanity over error and oppression. Investigating and writing about newsworthy events occurring around the globe is an expensive undertaking and enforcement of the copyright laws permits AP to earn the revenue that underwrites that work. Permitting Meltwater to take the fruit of AP’s labor for its own profit, without compensating AP, injures AP’s ability to perform this essential function of democracy. While commercial Internet news clipping services like Meltwater perform an important function for their clients, the public interest in the existence of such commercial enterprise does not outweigh the strong public interest in the enforcement of the copyright laws or justify allowing Meltwater to free ride on the costly news gathering and coverage work performed by other organizations. Moreover, permitting Meltwater to avoid paying licensing fees gives it an unwarranted advantage over its competitors who do pay licensing fees. As will be further explored below, Melt-water characterizes itself as an Internet search engine and emphasizes the importance of search engines to the operation of the Internet. Together, search engines and the Internet have delivered the world’s knowledge to the fingertips of multitudes across the globe. There is a strong public interest in preserving this democratic, instantaneous, and efficient access to information. But, there is no necessary tension between these two important public goods: news reporting and search engines. Quite to the contrary, these interests are complementary. The Internet would be far poorer if it were bereft of the reporting done by news organizations and both are enhanced by the accessibility the Internet provides to news gathered and delivered by news organizations. Neither Meltwater nor its amici have shown that a finding that Meltwater’s activities do not amount to fair use threatens Internet search engines in any way. For all of these reasons, the first factor in the fair use analysis decidedly favors AP. Meltwater’s argument that its use of the Registered Articles is transformative is premised on a single contention. It characterizes Meltwater News as a search engine that directs users to a source of information online and whose search results provide insight into “where, when, how often, and in what context” certain words or phrases appear on the Internet. Melt-water defines a search engine as a system that by design and operation improves access to information that is available on the Internet. According to Meltwater, the design and function of a search engine should decrease the likelihood that users would put the material displayed by the search engine to the same use as the original works. But, as can be gleaned from the discussion of Meltwater’s operations in earlier sections of this Opinion, Meltwater’s own description of Internet search engines does not correspond to how Meltwater News itself functions. Meltwater News is an expensive subscription service that markets itself as a news clipping service, not as a publicly available tool to improve access to content across the Internet. And, as further confirmation that Meltwater News is neither designed nor operated to improve access to the complete, linked news story, Meltwater has chosen not to offer evidence that Meltwater News customers actually use its service to improve their access to the underlying news stories that are excerpted in its news feed. As far as the thirty-three Registered Articles are concerned, customers rarely clicked-through to the underlying AP article. It occurred just 0.08% of the time. In her deposition, a Meltwater executive testified that a click-through rate of 0.05% would be consistent with her expectations. The click-through rate for the thirty-three Registered Articles is also consistent with a UK tribunal’s finding that Meltwater’s services produced a click-through rate of 0.5% for certain UK news sources. Melt-water has not offered any evidence that this seemingly small click-through rate is equivalent to that experienced by any of the Internet search engines to which it compares itself. While it might be more telling to learn what the click-through rate is for any single Meltwater News Report, rather than for a single article excerpted in a News Report, Meltwater has not provided that information either. Nor has it offered a comparison between the click-through rate for any single News Report and the rate for a single Google News search or any other search for news conducted through a recognized Internet search engine. This was a conscious decision on Melt-water’s part. During the discovery period, AP repeatedly requested additional data about Meltwater’s click-through rate in anticipation of any argument by Meltwater that Meltwater News directs traffic to the original websites for the news articles. Meltwater took the position that the data was not relevant to these summary judgment motions and refused to provide this discovery. The upshot is that Meltwater has no evidence that its system systematically drives its customers to third-party websites. Instead of driving subscribers to third-party websites, Meltwater News acts as a substitute for news sites operated or licensed by AP. Meltwater always reprints the story’s title and lede, as well as material surrounding one targeted keyword. Just as a news clipping service should do, Meltwater systematically provides its subscribers with what in most instances will be the essence of the AP article relevant to that reader. And again, despite the obvious point of comparison given its characterization of itself as a search engine, Meltwater does not attempt to show that the extent of its taking from the copyrighted articles is no greater than that customarily done by search engines. AP, in contrast, has offered evidence that Google News Alerts do not systematically include an article’s lede and are — on average — half the length of Meltwater’s excerpts. Rather than offering any evidence from which to compare its actual performance with that of Internet search engines, Melt-water has chosen to rely on two decisions from the Ninth Circuit Court of Appeals. Meltwater argues from these two decisions that the extent of its copying of the underlying work is irrelevant to the fair use analysis since even the copying of the full work can be transformative when done by an Internet search engine. Those two decisions, however, provide little comfort to Meltwater. In Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir.2007), the Ninth Circuit vacated a preliminary injunction and held that Google was likely to succeed in showing at trial that the display of small images called “thumbnails,” which were reduced, lower-resolution versions of the plaintiffs copyrighted photographs of nude models, on Google Image Search webpages was a fair use of the images. Id. at 1154— 55, 1168. The court found that Google’s use of thumbnails was “highly transformative” since its function was to serve as a pointer to a source of information rather than serving as a form of entertainment. Id. at 1165. Similarly, in Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir.2003), the Court of Appeals for the Ninth Circuit held that the display of small low-resolution pictures, again called thumbnails, on the website of an Internet search engine constituted a fair use of the plaintiffs photographs of the American West. Id. at 815. The search engine in Kelly produced only thumbnails in response to a user’s query, and no text. The court found that the use of the thumbnails was transformative because their use was “unrelated to any aesthetic purpose” since any enlargement “results in a significant loss of clarity of the image, making them inappropriate as display material.” Id. at 818. The display of thumbnails did not “stifle artistic creativity” or “supplant the need for the originals.” Id. at 820. There are several distinctions to be drawn between the instant dispute and the issues at stake in Perfect 10 and Kelly. The first and most obvious is that it was undisputed in both cases that the fair use defense was being applied to a search engine engaged in a transformative purpose. Unlike the searches in Perfect 10 and Kelly, Meltwater’s searches are not publicly available and are run against a defined list of content providers. As already noted, Meltwater has also not offered evidence that it actually functions like a search engine in other important respects. In short, use of an algorithm to crawl over and scrape content from the Internet is surely not enough to qualify as a search engine engaged in transformative work. The second observation that should be made is that the two Ninth Circuit decisions on which Meltwater relies provide little support for its argument that the reprinting of the entirety of a copyrighted work is a fair use so long as the reprinting is done by a search engine. The works at issue in the two Ninth Circuit decisions were photographs, which by their nature are indivisible. Neither Perfect 10 nor Kelly can be fairly read to support Melt-water’s claim that it is irrelevant how much of the Registered Articles it displayed in its search results. By emphasizing the small size and low resolution of the thumbnails, the Ninth Circuit relied on the fact that the thumbnails could not substitute adequately for the copyrighted works. If Meltwater captured and displayed the complete text of copyrighted news stories, it could no longer attempt to defend its business model as simply a search engine that aims to direct readers to the underlying story. Moreover, Meltwater’s discussion of search engines is to some extent beside the point. While it is important to understand how Meltwater News functions, even if it were a search engine it would still be necessary to examine whether Meltwater had acted to violate the Copyright Act. The fact that Perfect 10 and Kelly addressed the issue of the fair use defense in the context of webpages created by a search engine, and found the defense available to those defendants, does not relieve Meltwater of its independent burden to prove that its specific display of search results for its subscribers qualifies as a fair use. In other words, using the mechanics of search engines to scrape material from the Internet and provide it to consumers in response to their search requests does not immunize a defendant from the standards of conduct imposed by law through the Copyright Act, including the statutory embodiment of the fair use defense. By the same token, even though it could be said that a search engine merely “repackages” the original work, Infinity Broadcast Corp., 150 F.3d at 108 & n. 2, and does not transform it in the sense of adding “new expression, meaning or message,” Campbell, 510 U.S. at 579, 114 S.Ct. 1164, that does not mean that its taking is ineligible for protection under the fair use defense. Where a defendant’s use “is plainly different from the original purpose” for which the work was created, that use may be transformative. Bill Graham Archives, 448 F.3d at 609 (approving reproduction of a small image of poster along a timeline in a biography). As described by amici, the purpose of search engines is to allow users to sift through the deluge of data available through the Internet and to direct them to the original source. That would appear to be a transformative purpose. But, as discussed above, Meltwater has not shown that that is how it functions. Based on the undisputed facts in this record, Meltwater provides the online equivalent to the traditional news clipping service. Indeed, Meltwater has described itself as adding “game-changing technology for the traditional press clipping market.” There is nothing transformative about that function. See, e.g., Video Pipeline, Inc. v. Buena Vista Home Entm’t, Inc., 342 F.3d 191, 199 (3d Cir.2003) (clip previews of movies); Nihon, 166 F.3d at 72 (abstracts of news articles); Infinity Broadcast Corp., 150 F.3d at 108 (radio monitoring service); Los Angeles News Service v. Tullo, 973 F.2d 791, 797, 799 (9th Cir.1992) (video news clipping service.); Pacific and Southern Co., Inc. v. Duncan, 744 F.2d 1490, 1496 (11th Cir. 1984) (TV news clipping service). Finally, Meltwater seeks to defend its copying of the Registered Articles by pointing out that it used the content it takes from the Internet to also provide its subscribers with services like Dashboard Analytics. Meltwater argues that this use of the material constitutes a transformative use. This lawsuit does not challenge the display of any of Meltwater’s analytics to its subscribers. AP has not argued that the analysis of its publicly available content through these tools violates it rights. The display of that analysis — whether it be a graphic display of geographic distribution of coverage or tone or any other variable included by Meltwater — is an entirely separate service, however, from the publishing of excerpts from copyrighted articles. The fact that Meltwater also offers a number of analysis tools does not render its copying and redistribution of article excerpts transformative. In sum, the purpose and character of Meltwater’s use of AP’s articles weigh against a finding of fair use. B. Nature of the Copyrighted Work The second factor — the nature of the copyrighted work — considers principally two characteristics of the copyrighted work. First, this factor calls for consideration of “whether the work is expressive or creative, such as a work of fiction, or more factual.” Blanch, 467 F.3d at 256 (citation omitted). Works of fiction are “closer to the core of intended copyright protection” than are works that are predominantly factual. Infinity Broadcast Corp., 150 F.3d at 109 (citation omitted). Accordingly, the scope of fair use is broader with respect to factual works than it is with respect to works of fiction. See Nihon, 166 F.3d at 73. The second characteristic of the copyrighted work that is relevant to this factor is whether the work is published or unpublished. The right of first publication is an important right held by the copyright owner and “the scope of fair use is narrower with respect to unpublished works.” Wright v. Warner Books, Inc., 953 F.2d 731, 737 (2d Cir.1991) (citation omitted). AP’s articles are news stories and therefore more vulnerable to application of the fair use defense than works of fiction. Moreover, Meltwater copied works that were already published. As a consequence, this factor “is at most neutral on the question of fair use,” Nihon, 166 F.3d at 73, and should be weighed in favor of finding fair use. C. Amount and Substantiality of the Copying The third factor examines the amount and substantiality of the copying by the infringing work. This factor has both quantitative and qualitative dimensions, NXIVM Corp. v. The Ross Inst., 364 F.3d 471, 480 (2d Cir.2004), and is reviewed “with reference to the copyrighted work, not the infringing work.” Wright, 953 F.2d at 738. The quantitative assessment examines the portion of the copyrighted work that was taken in relation to the whole of that work. The qualitative dimension of this factor considers the importance of the expressive components of the portion copied. See Campbell, 510 U.S. at 587, 114 S.Ct. 1164; see also Rogers v. Koons, 960 F.2d 301, 311 (2d Cir.1992). In other words, the court should consider whether the portion taken is “essentially the heart” of the copyrighted expression. NXIVM Corp., 364 F.3d at 480 (citation omitted). The “most relevant” question for this factor is whether the infringer has taken “no more” than is necessary. Infinity Broadcast Corp., 150 F.3d at 110. In terms of quantitative copying, the Second Circuit has found that copying as little as eight percent of the original work may tip this factor against a finding of fair use. Iowa State Univ. Research Found., Inc. v. Am. Broad. Co., 621 F.2d 57, 61-62 (2d Cir.1980) (broadcasting of eight percent of student-made film); see also Salinger v. Random House, Inc., 811 F.2d 90, 98 (2d Cir.1987) (copying one-third of seventeen letters and ten percent of forty-two letters weighed against finding of fair use). It is clear, however, that no bright-line rule exists with respect to how much copying is too much. New Era Publ’ns Intern., ApS v. Carol Publ’g Group, 904 F.2d 152, 158 (2d Cir.1990). Thus, in other cases, copying up to eight percent of an original work is not inconsistent with fair use. Id. (eight percent); Maxtone-Graham v. Burtchaell, 803 F.2d 1253, 1263 (2d Cir.1986) (4.3 percent). Indeed, while appropriation of a copyrighted work in its entirety weighs against a finding of fair use, where a work is indivisible it is not an absolute bar to such a finding. See Bill Graham Archives, 448 F.3d at 613 (image of poster). At the same time, relatively small takings may be significant if the portions taken are qualitatively important. Harper & Row, 471 U.S. at 564-65, 105 S.Ct. 2218 (copying of 300 words of biography held substantial where copied portion was “essentially the heart of the book”). The reasonableness of the amount and portions copied will vary depending on the character and purpose of the secondary use. It may be necessary for the secondary user to copy a certain amount or specific portion of the original work in order to accomplish the transformative purpose. The Supreme Court’s analysis in Campbell v. Acuff-Rose Music, 510 U.S. 569, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994), is instructive. In that case, a rap group — 2 Live Crew — sampled portions of Roy Orbison and William Dees’ song “Oh, Pretty Woman” in a rap parody entitled “Pretty Woman.” Id. at 572, 114 S.Ct. 1164. In considering the amount and substantiality of the copying, the Supreme Court offered the following analysis: When parody takes aim at a particular work, the parody must be able to ‘conjure up’ at least enough of that original to make the object of its critical wit recognizable. What makes for this recognition is quotation of the original’s most distinctive or memorable features, which the parodist can be sure that audience will know. Once enough has been taken to assure identification, how much more is reasonable will depend, say, on the extent to which the song’s overriding purpose and character is to parody the original or, in contrast, the likelihood that the parody may serve as a market substitute for the original. Id. at 588, 114 S.Ct. 1164 (citation omitted). An analysis of this factor may offer insight into the fourth factor of the fair use analysis as well. In effect, the substantiality of the copying may foreshadow the extent to which the second work will be capable of serving as a market substitute for the original work. Id. at 587, 114 S.Ct. 1164. This factor weighs strongly against a finding of fair use here. Meltwater has not shown that its taking from the Registered Articles was defensible from either a quantitative or qualitative perspective. Meltwater took between 4.5% and 61% of the Registered Articles. It automatically took the lede from every AP story. As described by AP’s Standards Editor, the lede is “meant to convey the heart of the story.” A lede is a sentence that takes significant journalistic skill to craft. There is no other single sentence from an AP story that is as consistently important from article to article — neither the final sentence nor any sentence that begins any succeeding paragraph in the story. Nor has Meltwater attempted to show that it took no more than necessary to perform as a search engine, which is how it seeks to justify its infringement. It has not offered evidence that its automated programs for culling and displaying passages from articles are consistent with the industry standards for search engines. As the evidence offered on this motion illustrates, search engines regularly display briefer segments of news articles. As the CCIA describes the segments taken by search engines, they are no more than “a headline and a snippet of context” designed to direct users to the original source. Indeed, in its foreign operations, it is undisputed that Meltwater provides its customers with far less material than it provides in the United States. In Canada it delivers only headlines, and in the United Kingdom its excerpts are far shorter. Meltwater makes essentially three arguments to support its infringement under the third factor’s quantitative and qualitative tests. None of these arguments is persuasive. First, Meltwater relies on Nihon, 166 F.3d at 65,