INS: 4

The common law Some things we tried to cover: What is ‘common law’? Where does it come from? How do we know what it is? How did it get that way?

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

Back to the begining of news as ‘property’ Quotations from Douglas Baird: Property, Natural Monopoly, and the Uneasy Legacy of INS v. AP (2005)

Tickertape messages National Telegraph News Company v. Western Union Telegraph Company, 119 F. 294 (1902, Judge Grosscup) Protected transient news transmitted by telegraph for tickertape machines against misappropriation

Remember Mr Stone? Editor of Chicago Daily News, frequently pirated by the McMullen brothers, of the Post and Mail: “Er us siht la Etsll iws nel lum cmeht” “The McMullens will steal this sure.” (Not “The city cannot aid”)

Remember Mr Stone? [Judge] Peter Grosscup saw things in much the same way as Melville Stone. This was no accident. Grosscup and Stone were neighbors. Long before the litigation, Grosscup had endured long winter evenings in which Stone lectured him on how property rights in the news ought to be recognized, and they continued to talk about the idea while the Western Union case was being litigated.

Stone’s idea of property In Stone’s view, however, Judge Grosscup’s opinion did not go far enough. It did not explicitly recognize a property right in news. An analogy helps to explain what Stone had in mind. Suppose a town is many miles from a large lake. The water in the lake is inexhaustible and free for anyone to take. An entrepreneur builds an aqueduct to bring water to the distant town and then sells it to the local residents.

Property in news Water is protected once it is put into the aqueduct. If others tap into the aqueduct or bribe residents to redirect water intended for their own personal use to others, the entrepreneur can bring a conversion [tort] action. The stream of quotidian facts that coursed through AP’s wires should be treated the same way.

Property in news While he lauded the result in cases such as National Telegraph, Stone wanted courts to do more than fit the cause of action awkwardly into the pigeonhole of tortious interference. Courts should treat information sent over a telegraph network as they would treat water sent through an aqueduct. Both should become the property of the person that transported them.

Some questions Was Stone vindicated? Did the 1918 INS case deliver this vision? What remains after 80 years? Compare NBA v Motorola Is the law (for news) too broad, too narrow, about right?

NBA v Motorola [T]he surviving “hot-news” INS-like claim is limited to cases where: (i) a plaintiff generates or gathers information at a cost; (ii) the information is time-sensitive; (iii) a defendant’s use of the information constitutes free-riding on the plaintiff’s efforts; (iv) the defendant is in direct competition with a product or service offered by the plaintiff; 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 in question that its existence or quality would be substantially threatened.

More questions Should news be ‘property’ in the first place? What are the risks? What if one person came to ‘own’ the news? Other legal issues: anti-trust (monopolies) and freedom of speech: these concerned Brandeis especially

Anti-trust 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

Network effects The benefits become greater when a number of newspapers in a region join. News coverage expands. Soon people expect regional as well as local news, and newspapers must belong to the service to remain competitive. The network becomes larger, and the quality of the information improves still more. But a way must be found to prevent a paying member from entering into side deals with nonmember papers that want access to the same news on the cheap. The news organization must lay down rules. At this point, however, the agreement can also facilitate collusion.

‘Franchise rights’ Take, for example, a provision that prevents any member from using the news service for any new paper they begin in a town already served by an existing member. Such a provision is only a step short (if that) of an explicit agreement in which all the papers agree to stay out of one another’s markets. AP took shape in such a fashion during the second half of the nineteenth century. Limiting membership and reserving the right to expel those who violated the rules were essential to its success. AP’s contracts committed the newspapers to sharing their local news only with AP. Moreover, members enjoyed “franchise rights” that enabled them to blackball any new paper from becoming a member of AP within a given circulation area of the member’s own paper.

Anti-trust questions Was AP a ‘monopoly’ or ‘dominant’ Because of its size in the USA? Because of (exclusive) contracts with its foreign equivalents? Because of the post-1916 ban on INS in England and France?

Anti-trust questions If we accept that news is property, do these affect the result of the case? Should AP be obliged to share its news? Is news an ‘essential facility’ in modern language? Does it matter why AP refused? Are there issues with free expression?

Freedom of speech Brandeis: Allowing INS to copy AP was only way (in circumstances) to get European news to whole US public Pitney: Seems not to have mattered to him. Perhaps agreed AP actually at risk of being driven out of business by INS free-riding (compare NBA)

Personalities Brandeis: newest Justice on Court; socially liberal, progressive, active proponent of ‘judicial legislation’ Pitney: socially and politically conservative, pro-capital and anti-labour, little troubled with anti-trust, least liberal record on free speech

The end Yes, I shall try to have the materials put on your intranet