Hot News Doctrine in the U.S. in the United States

http://www.houstonlawreview.org/wp-content/uploads/2012/04/5-Sherrod.pdf

History of the Doctrine

In the early 20th century, William Randolph Hearst’s New York Journal was furious at Joseph Pulitzer’s New York World’s purloining of their copy, as Denis Brian writes in “Pulitzer: A Life”. Hearst had started a wire service of his own, International News Service, because the Pulitzer-controlled Associated Press blocked him from buying that wire’s copy. A lawsuit arose when Hearst’s INS went ahead and rewrote the facts contained in AP wire and moved them, and the courts created a “hot news” doctrine that stopped the upstart’s borrowing.

News Piracy and the Hot News Doctrine

Vol.15 No.12 (December 2005), pp.1037-1040

NEWS PIRACY AND THE HOT NEWS DOCTRINE: ORIGINS IN LAW AND IMPLICATIONS FOR THE DIGITAL AGE, by Victoria Smith Ekstrand. New York: LFB Scholarly Publishing, 2005. 214pp. Cloth. $62.00. ISBN: 1593320752.

Reviewed by Thomas Shevory, Department of Politics, Ithaca College. Email: shevory [at] ithaca.edu.

Victoria Smith Ekstrand’s recently published book is a very nice primer on what has been a relatively unexplored, but interesting and important, corner of the law: the so-called “hot news” doctrine. While questions regarding what legal protections “hot news” deserves may seem, on the surface, to be somewhat arcane, they are important historically; and they have contemporary significance for the wider field of intellectual property. Analysis of the “hot news doctrine” raises questions not only about the meaning of property rights, but also about the interconnections of federal and state law. The legal history implicates towering historical figures, such as William Randolph Hearst, Oliver Wendell Holmes, Louis Brandeis, as well as more recent pop cultural figures, such as NBA Commissioner Larry Stern. If a reader approaches this work, like me, unfamiliar with the intricacies of “hot news” doctrines, that reader may, like me, not see the world in entirely the same way after having read it.

The “hot news” doctrine refers to a very specific aspect of copyright. Copyright, a legal doctrine with a long tradition, involves legal protections for works that have been published, for which there is clear authorship, and the economic value of which does not recede over short periods of time. “Hot news” is a relatively recent phenomenon. It refers to written material, often “facts,” that have value for a short duration, and which will soon move into the “public realm” losing their value completely. Given the short time-frames at stake, questions of how to determine value, and underlying doubts about whether it should be protected at all, analysis of hot news can quickly become an extremely complicated undertaking. And, in fact, one thing that a reader will take from this book is an appreciation for how intricate questions of determining the value of intellectual property rights can be in some circumstances.

The book focuses on two major cases involving the hot news doctrine. The first is INDEPENDENT NEWS SERVICE v. ASSOCIATED PRESS (1918), a dispute from early in the 20th century involving William Randolph Heart’s news chain and the upstart AP, which challenged Hearst’s practice of what amounts to stealing its stories. The second is the more recent case of NATIONAL BASKETBALL ASSOCIATION v. MOTOROLA (1997), which involved the NBA’s challenge of a text-message service developed by Motorola, designed to give subscribers updates of basketball scores. Detailed background material on the INS case is provided, as well as analysis of its legal impact and implications. There is also ample contextual material on the [*1038] NBA litigation. For her analysis of the latter case, Ekstrand interviewed key participants. Discussion of the factual basis and legal doctrines related to each controversy is closely reasoned, well-documented, and clearly expressed. In fact, Ekstrand, who now teaches at Bowling Green State University, was at one time the Director of Corporate Communications for the Associated Press in New York City. Thus, she has a strong academic background and orientation, in addition to practical experience in the field.

The AP had been established as a kind of pact between newspaper publishers to share sources of information that could be distributed in local papers. Over time, as communications technologies improved, the value of “hot news,” or the most recently uncovered stories, increased. AP found a niche as a business that would provide “hot news” to various sources around the country. As its reach and importance grew, so did its power, as it attempted to fend off various competitors, such as UPI, which sprang up to challenge it. AP sought legislative property rights protections for its product, but Congress did not act to favor it. International News Service, on the other hand, was part of the early twentieth century Hearst news empire. For a long time, INS had been using materials from AP in the publication of its stories. In October 1916, a disgruntled employee of INS revealed to AP that he had been receiving stories from them via a telegraph operator in Cleveland and subsequently transferring them to INS. AP, apprised of this, sued INS on the grounds of unfair competition.

International News Service was created by William Randolph Hearst as an entity designed to lease wires to connect several of his major newspapers across the U.S. At first, Hearst primarily distributed comics, but over time, INS began to move into the distribution of news. During World War I, the British refused to allow Hearst to use British cable and mail systems, unless he followed the guidelines of British censors, something that he refused to do. Soon other countries followed Britain’s lead, and INS was left without access to an infrastructure from which it could gather news. Partly as a result, Hearst began to draw upon AP materials. He also turned to news reports originating in Germany, a practice that led to claims of sedition. These economic and political conflicts provided the backdrop for INS v. AP.

During the trial, it became abundantly clear that the factual claims about INS using AP materials, in effect plagiarizing them, were valid. Trial transcripts are replete with verbatim copies of AP stories published under the aegis of INS. While INS managers claimed the contrary, it was almost impossible for them to deny the weight of the evidence. Ekstrand’s book follows the case through Judge Learned Hand’s Federal District Court, into the Second Circuit, and ultimately to the Supreme Court.

The Supreme Court’s opinion involved a complicated attempt to parse out the potential property values of news. The Court wanted to avoid the common law view of copyright which would have allowed the news to be copied by INS. To do this, it had to distinguish the “literary value” of news from the facts communicated by news stories. As [*1039] such, it determined that news had a “dual character.” There was the “news” element and the “literary element.” While the news element, as a set of facts, did not have property right protections under copyright law, news as a product with commercial value, did have such protections. The INS essentially had, the Court determined, engaged in unfair competition by taking what amounted to be a commodity with value. Since the value of the news would expire over time, this amounted to a limited or quasi property right. INS had attempted to “‘reap where it has not sown’”(p.75). News services could take “tips,” but they could not simply lift written materials whole-cloth, even if solely factual in content, from another news source. Judge Louis Brandeis dissented, contending that such complicated determinations of the meaning of copyright ought to be left to Congress. As a result of the decision, news had, for the first time, received legal status as a form of property which could not be “misappropriated.”

Given controversies in copyright in the 21st century that involve everything from downloading content to selling of pirated CDs, it would seem likely that INS v. AP would have continuing relevance, and that is the case. The book interestingly and wisely juxtaposes the INS case to a more recent dispute involving the “misappropriation” of electronic material. NBA v. MOTOROLA involved Motorola’s attempt to establish a text messaging service that would provide customers with immediate access to NBA scores on an ongoing basis. In establishing the service, Motorola neglected, deliberately it seems, to ask the NBA’s permission to use its scores. The NBA had taken the position, since 1993, that it should and could limit the frequency of updates, because its scores change so frequently, essentially making the knowledge of NBA scores more valuable than those of other sports. The NBA had even negotiated a deal with a service called SportsSticker in which these rules were carefully articulated.

Unlike the INS case, NBA did not make it to the Supreme Court, but only to the Second Circuit. As a result of changes in the federal copyright law, the court found that NBA’s property claims had been preempted by federal law. Yet some forms of intellectual property could survive “preemption” if they met certain requirements. Those requirements include that the plaintiffs (1) gather information at a cost, (2) that the information is time-sensitive, (3) that the use of the information by the defendant is “free-riding,” (4) that the defendant is offering a service in direct competition with the plaintiff’s, and (5) that the capacity to free ride threatens the existence of the plaintiff’s commodity. The court ruled that the NBA could not meet the tests as explicated in such rules, and hence Motorola was awarded a victory (although the service was unsuccessful over time). The ruling seems to have both clarified and complicated legal protections of “hot news.” On the one hand, there is now additional precedent for such protections in common law, but these are somewhat limited in scope, or at least difficult to demonstrate in court. Of particular difficulty, is determining the meaning of competitive “harm.”

I found Ekstrand’s book to be a fascinating glimpse into a legal arena not yet subject to widespread scholarly [*1040] analysis. I learned that the doctrine has potentially broad and potentially important reach, and I appreciated the historical and highly contextual account of the cases that Ekstrand presents. Although the legal doctrines are complex, the book is accessibly written. I would recommend it to students and faculty interested of the rapidly expanding and increasingly important field of intellectual property rights.

CASE REFERENCES:
INDEPENDENT NEWS SERVICE v. ASSOCIATED PRESS, 248 US 215 (1918).

NATIONAL BASKETBALL ASSOCIATION v. MOTOROLA, 105 F.3d 841 (2nd Cir. 1997).

© Copyright 2005 by the author, Thomas Shevory.