Associated Press Continues its Fight Against News Aggregators

The Associated Press recently sued Meltwater alleging in its complaint that “[Meltwater] has built its business on the willful exploitation and copying of the AP’s and other publishers’ news articles for profit.” AP asserts copyright infringement claims as well as a common law hot news misappropriation claim under N.Y. law. AP notes that it has to expend significant resources to create its news content. It complains that Meltwater free-rides on its efforts by misappropriating AP’s news and information which Meltwater can then sell for minimal cost via the Internet. It characterizes Meltwater’s actions as a “parasitic” service whose free-riding could make it cost-prohibitive for AP to profitably compete; and, therefore, AP’s economic incentive to continue its business could be significantly threatened.

AP’s common law misappropriation claim has its origins in a remarkably similar suit AP brought against a competing news service almost a century ago. In INS v. AP the Supreme Court, in 1918, enjoined INS, a competing news service, from free-riding on the work product of AP. The misappropriation action was based on INS re-distributing information to its customers which AP had previously released into the public domain. INS was enjoined from using the information for a limited time period while it was hot news (i.e. while it had commercial value as news). The Supreme Court’s decision was based on two rationales: (1) preventing unacceptable conduct in the form of a commercial enterprise free-riding on the investment of time and money by a competitor; and (2) avoiding the resulting ruinous competition that could result from a commercial enterprise free-riding on the efforts of a competitor.

Although misappropriation has typically been an unsuccessful cause of action at the appellate level it has prevailed in some instances at the trial level. For example, in the recent case of Barclays Capital v. TheFlyonthewall.com an Internet news service aggregated and distributed information to subscribers. The information was gleaned, in part, from equity research reports created and distributed by major financial institutions. The U.S. District Court found that the recommendations in the equity reports were expensive to create, highly time sensitive and outside the domain of copyright law. Therefore, the District Court enjoined the news service from using the information for a limited period of time under a misappropriation theory. The Second Circuit, on appeal, reversed the District Court but held that misappropriation actions continue to exist under appropriate facts. Other judicial decisions have likewise concluded that misappropriation actions continue to be available.

Misappropriation actions should be eliminated by courts. Such actions are too often attempts to interfere with the Darwinian nature of the marketplace where technological change and other societal disrupters alter the business landscape. For example, the difficulties faced by traditional media – newspapers, television, publishing – are largely due to changes in technology rather than misappropriation based on free riding. The music industry attempted to use lawsuits to preserve the status quo. Nevertheless, despite such efforts music moved from physical media – CDs – to an online digital format which is downloaded to a computer, iPod, iPhone or other similar devices. Throughout history technologic change has always affected business enterprises. Sometimes existing industries were able to morph into different types of enterprises. Sometimes such industries have simply disappeared and were replaced by new industries that took advantage of new technology.

I am not suggesting a wild-west anything-goes marketplace. Existing legal restraints on competition provide a long-established framework for what marketplace behavior is and is not permissible. That framework which is based on unfair competition and intellectual property law (i.e. patent, copyright, trademark and trade secrets law) provides a well-developed (although not perfect) balance between permissible and impermissible conduct. Insertion of a common law misappropriation action upsets this balance which has evolved over a long period of time.

For a more detailed discussion of the common law misappropriation doctrine see Beckerman-Rodau, Ideas and the Public Domain: Revisiting INS v. AP in the Internet Age, 1 NYU Journal of Intellectual Property & Entertainment Law 1 (2011).

The Author

Andrew Beckerman-Rodau

Andrew Beckerman-Rodau

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 1 Comment comments.

  1. Gene Quinn March 20, 2012 10:32 am

    Andy-

    Thanks for the article. As always it is thought provoking.

    I’m not sure I agree with you. I haven’t any particular knowledge of this AP lawsuit, but as a publisher I don’t think I want to lose “hot news misappropriation.” There are things that you publish from time to time that take a lot of effort but where the copyright is thin, such as an interview. If I do an interview and then a larger website is able to copy the guts of the interview immediately then I am really working for them, having wasted my time, energy and in many cases financial resources.

    Copyrights do not protect the sweat of the brow, but I do think there should be some temporally limited sweat of the brow protection. In an Internet Age that would be quite a bit shorter than back in 1918, but I still think it should be there.

    I do agree with you, however, that the best claims will be copyright claims. There is a real and growing problem of copyright infringement on the Internet, which makes it harder and harder to properly monetize publishing. Even though our traffic here continues to grow, growth is definitely stunted by comparatively large scale copyright infringement. It isn’t malicious infringement, but the distribution of articles is infringing. That then means that to read articles you do not have to visit the website, which reduces traffic. Eyeballs are essential on the Internet when content is given away freely.

    Cheers.

    -Gene