Associated Press v All Headlines News

Last week the District Court of the Southern District of New York denied All Headlines News Corp’s motion to dismiss Associated Press’ claim of misappropriation of “hot news” headlines. The case is an interesting reminder of the existence of misappropriation in some US states as a separate, but similar, cause of action to breach of copyright.

All Headline News Corp’s business was based (in part) on re-writing Associated Press’ headlines and redistributing them for profit. One persuasive fact was the fact that All Headlines News didn’t undertake significant research themselves in creating the news stories.

The doctrine of misappropriation was established in the US Supreme Court in 1918 to protect the ‘quasi-property’ rights of news-gathering organisations in breaking news – time-sensitive content that quickly loses value as it comes into the public realm. Since then, misappropriation has survived various changes to the ways in which Federal and State laws interact, albeit in a narrower niche (described in NBA v Motorola):

1. a plaintiff generates or gathers information at a cost;
2. the information is time-sensitive;
3. a defendant’s use of the information constitutes free riding on the plaintiff’s efforts;
4. the defendant is in direct competition with a product or service offered by the plaintiffs; and
5. the ability of other parties to free-ride on the efforts of the plaintiff or others would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.

The key requirement is that there be an element of “free-riding”. In most “hot news” cases (at least the ones which would cause so much concern as to get to court) the other requirements are almost taken as read. There isn’t much guidance as to what constitutes a “free-ride” from a legal perspective, which is a concern as strategies for the monetisation of information shifts from the information itself having value to the service around it having value.

Consider, for example, an Internet based news aggregator developed around the service of collecting and distributing news headlines in a searchable format from a number of other online services – is that a free-ride? Some might argue that the aggregator only exists because of the content. Others might argue that the innovation of the aggregating service is something to be encouraged, and given the development effort involved, shouldn’t be considered a free-ride. Similar arguments are often discussed in the context of Internet search engines.

If this case makes it to trial, it will be interesting to see the how the court approaches the definition of free-riding, especially as might be applied to Internet aggregation services.

(Hat tip to Eric Goldman and Marty Schwimmer for drawing our attention to this development.)