12:45pm PT by Eriq Gardner
Bloomberg Argues Media Companies Can't Hold Monopolies on News
A century ago, the U.S. Supreme Court held that news can rise to "quasi property," and in circumstances when a news organization expends great skill, labor and money in gathering tips and producing content, another news organization swooping in and free-riding can amount to misappropriation. To permit indiscriminate publication 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," according to Justice Mahlon Pitney's 1918 opinion.
Since International News Service v. Associated Press, the doctrine of "hot news misappropriation" has faded into the background and has only come up a handful of times in courtrooms. On Thursday, defending a lawsuit evoking the doctrine, Bloomberg, L.P. called the INS decision "no longer good law" and an anachronism aimed at muzzling media companies.
"In a world of citizen journalists and commentators, online news organizations, and broadcasters who compete 24 hours a day, news can no longer be contained for any meaningful amount of time," writes Bloomberg's attorneys at Quinn Emanuel. "Because it would be impossible to craft and enforce a rule restricting the dissemination of readily accessible factual information, this Court should acknowledge that 'hot news' misappropriation cannot be practically or fairly applied and should not be recognized under D.C. law."
Bloomberg is being sued by DBW Partners, which puts out a subscription report called Capitol Forum. According to the plaintiff, Bloomberg has been surreptitiously obtaining reports, and within minutes, republishing summaries for its own subscription news services. No analysis or meaningful original reporting is added, notes the complaint.
The lawsuit brings other claims such as copyright, which Bloomberg argues fails without identification of registration, but it's "hot news" where this case figures to make a mark given certain unsettled legal issues.
There have certainly been a few cases addressing factual free-riding since INS.
For example, take a mid-1990s case where the National Basketball Association sued Motorola over handheld pagers providing users updated information of games in progress. The lawsuit failed, though the 2nd Circuit did leave the door open to hot news misappropriation claims in instances of costly, time-sensitive, competitive free-riding.
This decade has seen mixed results. On one hand, the Associated Press prevailed against Norway-based news monitoring service Meltwater in a 2013 decision. On the other, a website called TheFlyontheWall.com overturned a 2011 injunction over buy and sell stock recommendations when the 2nd Circuit held that "a Firm's ability to make news — by issuing a Recommendation that is likely to affect the market price of a security — does not give rise to a right for it to control who breaks that news and how."
In arguing for dismissal of the latest case, Bloomberg turns its attention to the Supreme Court's landmark 1991 case, Feist Publ's, Inc. v. Rural Tel. Serv. Co., which dealt with telephone directories, and the high court's guidance that when it comes to copyright, it's "originality, not 'sweat of the brow'" that matters in the protection of factual compilation.
Bloomberg' attorneys write, "Feist’s reliance on the Copyright Clause compels two conclusions: (1) a work must be original to qualify for copyright protection; and (2) the freedom to use facts — even to “free-ride” on facts gathered by others through great effort — is constitutionally protected."
As such, continues the defendant, "hot news misappropriation" is incompatible with constitutional principles. Additionally, Bloomberg argues that as a matter of public policy, the tort conflicts with today's widely employed and unchallenged news practices.
"Cable and broadcast television news programs, as well as multitudes of other news outlets, feature constant streams of news, with or without attribution to their original sources," states the motion (read in full here). "News reporting always has been a complex ecosystem, where one organization breaks the news, and another subsequently reports on it — all to the benefit of the public. The tort of “hot news” misappropriation, however, would grant the original news source a temporary monopoly over such facts — an outcome that is inconsistent with the strong public interest in receiving important, timely news."