International News v Associated Press A theme and variations over four days Trier, December 2008

Christopher Wadlow University of East Anglia

1: INS: the facts, and some of the fiction

International News Service v Associated Press (1918) 248 US 215, 39 SCt 68, 63 LEd 211

INS: The cast William Randolph Hearst, Press Baron and politician, the original for Orson Wells’ Citizen Kane Melville Stone, Managing Director of Associated Press. Hated Hearst. Convinced news was ‘property’

INS v AP, the background AP was a cartel of 1000 US newspapers pledged to mutual local exclusivity It was dominant by virtue of size, network effects, natural monopoly, and exclusivity with members and non-US agencies News was almost free at source, but costly to disseminate. Costs were mainly fixed, tied to AP’s cable network

INS v AP, October 1916 INS was owned by William Hearst. Hearst owned three major papers within AP, but AP resisted further Hearst memberships INS had been excluded from access to war news in UK and France, ostensibly for inaccuracy, in reality for strongly anti-war stance

AP’s three complaints Bribing a telegraph operator at an AP paper Taking bulletins from Hearst’s own AP subscription, and passing them to INS in breach of his terms of membership Taking news items from published AP editions in New York, and telegraphing them to INS subscribers in the mid-west and west

The one which stuck ‘[M]ost of the foreign news reaches this country at the Atlantic seaboard... and because of this, and of time differentials due to the earth’s rotation, the distribution of news matter throughout the country is principally from east to west; and, since in speed the telegraph and telephone easily outstrip the rotation of the earth, it is a simple matter for defendant to take complainant’s news from bulletins or early editions of complainant’s members in the eastern cities and, at the mere cost of telegraphic transmission, cause it to be published in western papers issued at least as early as those served by complainant.’

INS v AP, Pitney J: ‘The right of the purchaser of a single newspaper to spread knowledge of its contents... may be admitted; but to transmit that news for commercial use, in competition with complainant—which is what defendant has done and seeks to justify—is a very different matter.’

INS v AP, Pitney J ‘[D]efendant... is taking material that has been acquired by complainant as the result of organization and the expenditure of labor, skill, and money, and which is salable by complainant for money, and... is endeavoring to reap where it has not sown, and by disposing of it to newspapers that are competitors of complainant’s members is appropriating to itself the harvest of those who have sown.’

INS v AP, Pitney J ‘Stripped of all disguises, the process amounts to an unauthorized interference with the operation of complainant’s legitimate business precisely at the point where the profit is to be reaped, in order to divert a material portion of the profit from those who have earned it to those who have not; with special advantage to defendant in the competition because of the fact that it is not burdened with any part of the expense of gathering the news.’

INS summed up No absolute ‘property’ exists in news Action lay against INS because it was a competitor, hence action is for ‘unfair competition’ Misappropriation of news, in competition with its originator, was actionable despite absence of misrepresentation

The (simplified) issue Two formulations Protection of ‘hot news’ under law of unfair competition General basis for doctrine of ‘misappropriation’ in common law

Questions for us Basically, three central ones: How did the court get there? What does it all mean? What effect has the INS case had since?

Unfair competition? So it’s four days about unfair competition? Not really. Pre-existing Anglo-US U/C law almost entirely dependent on misrepresentation (passing-off) INS has NOT led to any systematic law of U/C by misappropriation

INS as a dead end? In some respects. Certainly not the basis of a whole new law (or new half-law) of unfair competition Meanwhile, here are some of the issues I propose to use the INS case to illustrate over the next few days

Code and common law There is no statute or code in the USA dealing with unfair competition There is not even a general code or statute for torts, or even for property Law of U/C is entirely defined by cases; it is judge-made

How common law is made Which judges make it? In England, fairly simple hierarchy of courts: House of Lords (top), Court of Appeal (middle), High Court (trial) In US: much more complicated

Federal/state law US consists of 50 states. Each state has a legislature and courts US has own Federal legislature (Congress) and federal court system US Supreme Court tops both systems

The common law So think of this week as an exercise in the common law, rather than intellectual property specifically What is ‘common law’? Where does it come from? How do we know what it is? How did it get that way?

And watch out for these on the way

American legal education The casebook method INS in the US Law School curriculum Hart & Sacks Legal Process Materials IP/UC/Regulation casebooks e.g. Kitch & Perlman

Legal taxonomy News as property? Is it? What ‘makes’ property? Tort? Specifically unfair competition? Restitution for unjust enrichment? Something else?

The US Constitution The court system, Congress, and the separation of powers The patent and copyright clause Federal and state law The Supreme Court

Copyright law The Constitution: Patents and copyright clause The Copyright Act 1909 Registration and copyright notice No copyright in factual materials Federal pre-emption by copyright law

Copyright treaties The USA and ‘international copyright’ The Berne Convention The Rome Convention (‘Neighbouring Rights’) Performers’ rights; broadcasting; sound recordings

Antitrust law The constitution of AP AP as a ‘trust’, the 1945 decision AP as dominant in foreign/war news AP’s news as an ‘essential facility’

Freedom of speech Two views on press freedom The right to receive, as well as impart, information The continued viability of AP vs that of INS: which is worse, copying or exclusion? Prior restraint and ‘due process’

Unfair competition Nature and place in the common law Relation to other bodies of IP law Forces for development or stasis Judicial attitudes towards U/C Taxonomy of U/C law

INS in the ‘common law’ Inside USA Outside USA Pre-INS UK: copyright, ‘Our Dogs’ case Australia: ‘Victoria Park’ case UK etc since then

All these to come. Meanwhile, INS in more detail

The background AP the leading American news agency. Constituted on basis of territorial exclusivity. i.e. each AP member was exclusive for its own city/location. AP acted as a co-operative. Members shared US news. Had exclusive contracts with main non-US agencies

INS: the history Oct 1916: INS banned from UK for unfavourable news coverage of War Jan 1917: AP commence litigation April: First instance judgment Late 1918: Supreme Court decision

A quick summary ‘INS would take AP’s hot news stories about World War I battles from publicly distributed New York newspapers that subscribed to the AP service. INS would then telegraph the story to the West Coast to Hearst newspapers, which would print the stories, sometimes ahead of the West Coast AP newspaper subscribers. Thus, INS appropriated hot news stories that had been gathered by AP at great expense and effort. There was usually no copyright infringement, for there was usually no copying of the exact words of an AP dispatch; rather there was an appropriation of the underlying factual information.’

What’s wrong with that? AP had three complaints, this was only one of them AP did not gather news at great expense and effort, it just digested press briefings. Does this affect whether news is ‘property’?

The three complaints INS had bribed a telegraph operator to pass on confidential AP news items INS took AP bulletins from a Hearst paper which subscribed to AP INS took published AP news from early East Coast editions

An adversarial system Remember, the common law is ‘adversarial’. Parties present cases pro- and con- to the judge. Judge does not take initiative or investigate facts But, judge is not bound to choose between parties’ legal submissions. He decides legal issues for himself

What did AP want? An injunction to stop INS copying in the future. (An interim injunction). A binding precedent that news is ‘property’ or at least that it is protected by law What’s the difference? Why both?

Precedent Every decided case contributes to the body of case law or precedent, but: The first case to decide a particular point is especially important. It is the first precedent Other courts later will probably (perhaps must) follow it. Depends on status of previous court in hierarchy

Injunction An injunction is binding on a specific party as a result of a court decision INS was subjected to an ‘interim’ or ‘preliminary’ injunction, i.e. pre-trial Injunction binds INS specifically, on the facts of the case. Precedent sets rule of law binding (in principle) in future cases against anyone

How to decide case? No code, no statute, no (single) source of law What about case law? i.e. ‘precedents’ First, categorise and analyse the cause(s) of action, but bear in mind the ultimate remedies AP sought

1: Bribery Criminal law? Perhaps, but are we interested? Not much. Why not? Little point in prosecuting individuals. What we want is: civil c/a; against INS as such; giving rise to injunction

1 and 2: Interference There is a tort of interference with contract which was well-established How useful in complaints 1 and 2? What are its shortcomings? On the facts of INS v AP? In the long term, from AP’s point of view?

1 and 2: Confidence There is also an equitable doctrine of breach of confidence How useful in complaints 1 and 2? What are its shortcomings? On the facts of INS v AP? In the long term, from AP’s point of view?

1 and 2: Where are we? How useful would it have been to win complaints 1 and 2 individually? Would this have stopped INS copying War news in the near future? Would it have delivered the precedent AP and Stone wanted? What can we do about complaint 3?

End of class 1