March 2009 IP Update

This Just In: "Hot News" Law Is Yesterday's News

By David Blau

A little known and even less used legal theory is unfortunately making its way back into the courts. In a lawsuit filed last year, the New York-based Associated Press (AP) alleged that Florida-based competitor All Headline News (AHN) unlawfully distributes AP news stories on the Internet under the AHN banner, either by rewriting the text or copying stories in full. In addition to asserting violations of various copyright laws, the AP is also claiming that AHN misappropriated the "breaking news" facts of stories researched by AP.

In the first such ruling in the Internet age, a federal judge in New York City issued a memorandum and order finding that this kind of misappropriation gives rise to a viable claim under the so-called hot news doctrine, and denied a request by AHN to have the case thrown out.

The "hot news" doctrine protects time-sensitive, breaking-news facts that are gathered by news organizations on their time and at their expense. The doctrine does not prevent the public from redistributing those facts, it only stops competitors in the news business from taking a "free ride" on the back of the organization that gathered them. The doctrine was established by the Supreme Court in 1918 in a case won by the AP, but it has not gotten much play in the courts because of its narrow applicability.

The present ruling itself is a fairly routine exercise in determining which state's laws to apply (New York's), and whether the laws of that state allow for this kind of lawsuit (they do). The real story here is the possible revival of a legal doctrine that gives a news gatherer an awkward "quasi-property" right in the facts on which it reports.

Ordinarily, a person or a company cannot own facts as property, because public policy favors the free dissemination of information. For instance, ideas cannot be copyrighted, only their expression, and there is extensive case law belaboring the "idea/expression dichotomy." As another example of the rule, courts have consistently held that patents cannot protect pure facts, only their industrial uses. The hot news doctrine is an exception, which the Supreme Court carved out to protect the economic interests of those who disseminate news facts.

To obtain protection under the hot news doctrine, New York requires that a plaintiff prove five elements: (i) the plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant's use of the information must constitute free-riding on the plaintiff's efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiffs; and (v) 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.

This doctrine's day has passed. The public policy that the Supreme Court relied on to create it may have been applicable 90 years ago, but the economics of news distribution have changed, and the law should reflect this evolution.

With the rise of modern communications tools, it is now possible to report news in ways that would have been unimaginable when the hot news doctrine was first developed. Images and video may now be broadcast via satellite or the Internet at a nominal cost. The proliferation of these tools to the masses has created a new source of news facts, at no cost to the public (or to a newsgathering organization).

These tools drastically affect the calculus of time sensitivity. The transatlantic telegraph sent only 120 words per minute at the dawn of the 20th century. It took several minutes to transmit what would today be considered a news story of only moderate depth, and it may have been hours before a number of news stories could be sent. Today, large volumes of news facts can be originated from nearly every country and distributed worldwide just seconds after a newsworthy event occurs.

The problem of businesses free-riding on their newsgathering competitors' work, which the court addressed with the hot news doctrine, may actually be seen as a form of unfair competition. For many decades now, the federal Lanham Act and state law counterparts have addressed these kinds of trade practices.

Fact-gathering is only one component of the news product. A news company may strategically choose specific localities or subjects to cover, critically analyze the gathered facts, and write insightful commentary, all under the protection of copyright law. These are the activities that contribute to the value and goodwill of most news organizations.

In this model, a competitor's misappropriation of the bare news facts underlying the news organization's stories poses no significant threat, or, at least, none that cannot be addressed by copyright or unfair competition laws. By contrast, the copying of ideas and information (and not copyright-protected expression) should be seen as protected under the First Amendment.

The "hot news" doctrine is a relic from an earlier age, a special protection carved out for a niche industry, whose raison d'être has been supplanted by modern legal mechanisms of much wider applicability. The trial judge has allowed AP the opportunity to prove that AHP stole its "hot news," but the very concept poorly fits our era of almost instantaneous flows of information.

The AP implicitly recognized this legal evolution in its complaint, charging AHN with three unfair competition counts under the Lanham Act and two copyright violations, in addition to hot news misappropriation.

American jurisprudence has been trying to forget the hot news doctrine for nearly 100 years. It may be best for it to quietly fade away.