Fox News under fire for use of unauthorized footage

By Eriq Gardner

A New York federal judge has denied Fox News' attempt to dismiss a lawsuit claiming that it breached a contract by continuing to show footage of convicted scam artist Bernie Madoff and his wife on a yacht.

The cable news network is battling Kenneth Stadt, who owns the rights to the Madoff video. In early 2009, Stadt gave Fox News an exclusive license to his footage for 45 days in return for $10,000. The network later re-upped for another 45 days in return for $50,000 more. According to the complaint, the term then expired, but Fox allegedly kept using the footage anyway.

Stadt sued for copyright infringement and breach of contract, later amending his complaint to include claims of conversion, breach of fiduciary duty, and accounting.

Fox attempted to dismiss all but the copyright charge on grounds that the Copyright Act preempted state-based claims.

In analyzing the breach of contract claim, Judge Shira Scheindlin analyzed whether there was an "extra element" that made the claim different from the copyright one. In this case, the plaintiff argued that Fox's continued promotion of the unauthorized footage as a "Fox Business Exclusive" qualified as that extra element.

In the decision, the judge agrees that taking credit for an exclusive may represent a plausible material breach of the contract. Fox was let off the hook on the conversion and breach of fiduciary duty claims.

Barring a settlement, the network will have to go to trial with a good reason why it was entitled to air the footage after the expiration of its agreement. 

This isn't the only Fox News battle with an owner of copyrighted video. In another case involving an interview with Michael Jackson's ex-wife, the network is claiming it had a "fair use" right to use footage, which has raised eyebrows since Rupert Murdoch has given interviews criticizing the legal concept. Earlier this month, a California District Court denied Fox's motion to dismiss that case too.