The U.S. District Court for the Southern District of New York recently issued a “first-of-its-kind” opinion in a case with potentially wide-ranging implications for anyone engaged in the online dissemination of news. (See, The Associated Press v. All Headline News Corp., et al., 08 Civ. 323 (PKC), Memorandum and Opinion, dated Feb. 17, 2009). By denying a motion to dismiss in the matter, the court has cleared the way for a possible showdown between old and new media.
In its complaint, the AP alleges that online venture AHN enlisted “poorly paid individuals” to cull the Internet for news, including AP stories, and then either rewrote or cut-and-pasted those stories, and disseminated them to the websites of its own paying customers in the form of news reports and breaking news—thereby freeloading on the great effort expended, and great expense incurred, by “one of the world’s oldest and largest news organizations,” self-described as the “gold standard of objective journalism.”
This appears to be the first case to apply an old principle known as the “hot news” doctrine to Internet content. However, in this era of greatly reduced advertising, subscriber revenues, and life-or-death challenges for even the most venerable newspapers and other newsgathering organizations, it is not likely to be the last attack on alleged online “freeloaders.”
The “hot news” doctrine invoked by AP and relied on by the court goes back to a 1918 U.S. Supreme Court decision (International News Service v. Associated Press, 248 U.S. 215), which found breaking news to be “quasi property,” subject to protection from free-riding, or misappropriation, by competitors. In International News Service, the Supreme Court held that allowing one news agency to appropriate and profit from the work of another would “render publication profitless, or so little profitable as in effect to cut off the service by rendering the cost prohibitive in comparison with the return.” (Id., at 241.) As the Court explained, news gathering carries with it “the expenditure of labor, skill and money,” and its appropriation by another “is endeavoring to reap what it has not sown.” (Id., at 239-40.)
Although the common law origins of this doctrine render it non-binding now in federal courts (where it has been preempted by the federal Copyright Act), the doctrine is still recognized in various states, including New York, the state law found by the court to govern AP’s claims. In New York, the court ruled, a cause of action for misappropriation of “hot news” remains viable and has not been preempted.
The court also allowed AP’s claims under the Digital Millennium Copyright Act (for “intentionally altering or removing copyright management information”) and under New York State unfair competition common law to go forward, but dismissed two counts of AP’s complaint based on the Lanham Act (for trademark infringement and for unfair competition under the statute).
The court’s docket does not yet reflect when an answer will be due, but the case bears further monitoring by anyone engaged in the gathering and/or dissemination of news.