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C07_MARIMON (DO NOT DELETE) 5/17/2013 12:56 PM
1441
Shutting Down the Turbine: How the
News Industry and News Aggregators
can Coexist in a Post-Barclays v.
Theflyonthewall.com World
Nicole Marimon
I
NTRODUCTION ........................................................................... 1442
I. THE HOT NEWS DOCTRINE......................................... 1445
A. Aggregators . . . Never Heard of Them ................ 1446
B. The Trouble with the Newspaper Industry ........... 1450
C. Hot News Doctrine Reel....................................... 1453
1. Rewind: Hot News Comes on the Screen ...... 1453
2. The Road to Barclays: NBA v. Motorola ....... 1456
3. The Slow Death of the Hot News Doctrine:
Barclays v. Theflyonthewall.com ................... 1457
D. Relations of a Sort: Hot News and Copyright ..... 1462
E. It’s Alive: Hot News Continues to Exist in
Jurisdictions ......................................................... 1465
II. THE FUTURE OF HOT NEWS........................................ 1467
A. Concerns Post-Barclays in the Second Circuit .... 1468
B. A Return to the Federal Field .............................. 1470
C. Using the Copyright Act....................................... 1472
D. Keeping with the Common Law ........................... 1475
J.D. Candidate, Fordham University School of Law, 2014; B.A., New York
University, 2010. Thanks to Ryan Fox, Tiffany Miao, Tiffany Mahmood, Laura Lagone,
and the rest of the IPLJ staff for their help in editing this piece. Thank you to Sasha
Segall for her support and direction throughout this process. A very special thank you to
Professor Olivier Sylvain for his guidance, inspiration, and strict schedule, without which
I never would have reached this point. Finally, to my family, thank you for being an
unending supply of support, but, mostly, to my aunt for putting up with me and my
mountains of paper throughout this writing process.
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1442 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 23:1441
E. Forget the Second Circuit .................................... 1476
III. MISCONCEPTIONS AND REEVALUATIONS—WHERE
DO WE GO FROM HERE? ............................................ 1478
A. Trouble in Paradise ............................................. 1478
B. Property Myths in Hot News ................................ 1481
C. Here’s to Change: A New Hot News
Formulation ......................................................... 1483
D. Foreign Licensing Schemes ................................. 1485
E. The Trouble with Prior Restraints ....................... 1487
CONCLUSION ............................................................................... 1488
INTRODUCTION
In February 2012, news that an employee at The Huffington
Post was killed after being sucked into the powerful news
aggregator’s content-gathering turbine engine was spreading across
the Internet.
1
In reality, “America’s Finest News Source,” The
Onion, was entertaining the web with another one of their classic
satirical pieces, this time taking on powerhouse news aggregator
The Huffington Post.
2
The Onion’s article makes a point of
mentioning many of the publications, The Washington Post and
New York Times included, that The Huffington Post combs through
in order to create their standard 400-words or less snapshots of the
news.
3
The Huffington Post is probably the most famous and
successful news aggregation website in existence.
4
Like many
others out there, The Huffington Post is in the business of selling
news in short snippets. Their business model, as pointed out by
The Onion, involves producing an exorbitant amount of content at
1
“Huffington Post” Employee Sucked into Aggregation Turbine, ONION (Feb. 2,
2012), http://www.theonion.com/articles/huffington-post-employee-sucked-into-
aggregation-t,27244.
2
Id.
3
See id.; HUFFINGTON POST, http://www.huffingtonpost.com (last visited Jan. 13,
2013).
4
For example, AOL purchased The Huffington Post in 2011 for $315 million. See
Jeremy W. Peters, Betting on News, AOL Is Buying The Huffington Post, N.Y. T
IMES
(Feb. 7, 2011), http://www.nytimes.com/2011/02/07/business/media/07aol.html?_r=0.
C07_MARIMON (DO NOT DELETE) 5/17/2013 12:56 PM
2013] NEWS INDUSTRY AND NEWS AGGREGATORS 1443
breakneck speeds.
5
The company’s influx of manpower after a
buyout by AOL only increased their ability to produce.
6
The Onion piece focuses on an important trend that has been
growing in the last decade: the practice of news aggregators
mining information from traditional newsgathering sources and
making a profit from it.
7
The online news market moves fast, but
traditional media giants, particularly newspapers, have failed to
profitably integrate themselves into the system.
8
Hurting from
attacks on every field, the newspaper industry suffers, while news
aggregators continue to profit on the labor of others.
9
At the
source is the tension between paid content and unpaid content.
10
Having long upheld a system of allowing free access to their online
content, the newspaper industry faces competition from online
sources that can create the same information for less.
11
Looking for solutions, the industry has increasingly turned to
the legal system for relief. The Associated Press recently brought
suit against Meltwater News, a global online media-monitoring
site.
12
This is the latest of several attempts by the Associated Press
to sue a news aggregator for using its content. The claim, which is
primarily about copyright infringement, also alleges a violation of
the hot news doctrine.
13
Filed this year in the Southern District of
5
See “Huffington Post” Employee Sucked Into Aggregation Turbine, ONION (Feb. 2,
2012), http://www.theonion.com/articles/huffington-post-employee-sucked-into-
aggregation-t,27244.
6
See Jeff Bercovici, Why Doesn’t AOL Just Sell The Huffington Post, FORBES (May
9, 2012), http://www.forbes.com/sites/jeffbercovici/2012/05/09/why-doesnt-aol-just-sell-
the-huffington-post.
7
See ONION, supra note 1.
8
See infra Part I.B.
9
See id.
10
See id.
11
See id.
12
MELTWATER NEWS, http://www.meltwater.com/products/meltwater-news (last
visited Oct. 31, 2012), see also Associated Press v. Meltwater, C
ITIZEN MEDIA LAW
PROJECT (Feb. 16, 2012), http://www.citmedialaw.org/threats/associated-press-v-
meltwater-news (explaining that Meltwater creates a search database that allows clients
to find the information they want through keywords, phrases, and topics).
13
Meltwater allegedly infringed copyright by taking complete copies of Associated
Press stories and storing them on their database. In their complaint, the Associated Press
alleged that Meltwater would circulate “substantial verbatim excerpts” in newsletters and
email reports. This allowed subscribers of Meltwater’s services to access, save, edit, and
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1444 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 23:1441
New York, it is surprising to see the news industry still turning to a
doctrine that in recent years has been left without much bite.
14
The hot news doctrine was first established in International
News Service v. Associated Press.
15
The case involved the taking
and reusing, by International News Service, of the Associated
Press’ content.
16
International News Service was able to undercut
the Associated Press by taking AP content published on the east
coast and supplying it to INS subscribers on the west coast.
17
Decisions in the Second Circuit have left the doctrine, which was
created to protect the time value
18
of the news, in a precarious
situation. In Barclays v. Theflyonthewall.com, the most recent
appellate decision dealing with hot news, the Second Circuit
looked at previous case law and deemed the hot news test
developed therein was dicta.
19
In doing so the court left the
doctrine ambiguous and failed to provide lower courts with the
proper framework for a hot news analysis. Outside of insisting that
a limited International News Service type claim survived copyright
preemption, the court left the doctrine, and everyone else, in the
dark.
20
Some argue the doctrine is on its way out and is no longer truly
applicable today.
21
Yet the circumstances surrounding AP v.
Meltwater are eerily similar to INS v. AP; years after INS, AP-
generated content is still being misappropriated by others.
22
Now,
when the practice of aggregation has become so commonplace that
even distribute the full text of the articles and excerpts. They also allege Meltwater
prepared unauthorized translations of the articles. See Complaint at 2, Associated Press v.
Meltwater U.S. Holdings, Inc., 2013 WL 1153979 (S.D.N.Y. 2013) (No. 12 Civ. 1087
DLC).
14
See Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876, 878 (2d Cir.
2011).
15
International News Service v. Associated Press, 248 U.S. 215, 231(1918).
16
See id.
17
See id.
18
Time value meaning the profit garnered by the timely publication of news, the
depreciation of news occurring the more time passes and the more it spreads.
19
See Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876, 901 (2d Cir.
2011).
20
See id. at 894.
21
See id. at 878.
22
See infra Part I.C.
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2013] NEWS INDUSTRY AND NEWS AGGREGATORS 1445
we easily accept it as a norm, the legal doctrine best placed to
protect the industry is slowly being eroded by decisions, like
Barclay’s, that fail to solidify the doctrine in concrete terms.
23
Perhaps the doctrine is no longer fully equipped to deal with the
scenarios found in today’s digital industry, but some form of
protection must be in place to ensure the continuation of
responsible and comprehensive newsgathering.
This Note will argue that the best form of the doctrine going
forward is one that begins to chip away at the propertization of the
news and the hot news doctrine by promoting a licensing scheme
that encourages self-regulation and collaboration. The plan would
ideally help traditional industry players establish more of a
foothold in the online market. Part I of this Note will discuss the
current status of the news media and the development of the hot
news doctrine. Part II will focus on the possible re-imaginings the
doctrine could undergo in order not only to keep it alive, but also
to make it more applicable to today’s predominantly digital
market. Finally, Part III presents some issues that will be faced by
any new incarnation of the doctrine. In conclusion, it is argued
that the best solution is to keep a common law doctrine, but one
with changes that include a new conception of what timeliness
means and that stipulate what kinds of remedies apply. The
solution stresses the integration of hot news with industry self-
regulation schemes like News Right,
24
schemes that would help
support the industry while it develops a stronger business model
online. Promoting the profitable coexistence of both news
gatherers and aggregators is the goal the industry should strive for:
symbiosis rather than parasitism.
I. T
HE HOT NEWS DOCTRINE
A look at the inception and development of the hot news
doctrine, along with a look at the current status of the news
industry, will help us understand what role hot news has to play in
protecting news gathering. First, this Note will take a closer look
23
See Theflyonthewall.com, Inc, 650 F.3d at 894.
24
See infra Part I.A..
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1446 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 23:1441
at the types of news aggregators competing for news revenues and
the nature of the struggle faced by the news industry, before
delving further into the current status of the newspaper industry,
focusing on the challenges and changes the industry has faced as a
result of the digital age. Next it will explore the development of
the hot news doctrine since its inception in INS v. AP through the
recent Second Circuit decision of Barclays v. Theflyonthewall.com.
Then it will consider the relationship between copyright and the
hot news doctrine, before considering several examples of state
misappropriation doctrines by way of demonstrating how the
doctrine has remained in play throughout the last few years, with
special focus on the limitation preemption analysis can sometimes
cause.
A. Aggregators . . . Never Heard of Them
In a country of media giants, the digital age has been an uphill
battle for most traditional news organizations.
25
It may be a losing
battle. Several years ago, news aggregators came onto the online
scene and are now so integrated into the online news setting that
many people do not even realize they are not getting their
information from the original producer. Popular news aggregators
include Google News, The Huffington Post, Gawker, and Salon.
26
With a simple business model, consisting primarily of gathering
information from other news sources and repackaging it into a few
paragraphs at most, aggregators have the ability to distribute the
same information at a minimal cost.
27
Recent studies have found
25
See generally LUCAS GRAVES, BILL GRUESKIN & AVA SEAVE, THE STORY SO FAR:
WHAT WE KNOW ABOUT THE BUSINESS OF DIGITAL JOURNALISM, (Columbia Journalism
School Tow Center for Digital Journalism) (2011), available at http://cjrarchive.org/
img/posts/report/The_Story_So_Far.pdf; Rick Edmonds et al., Newspapers: Building
Digital Revenues Proves Painfully Slow, P
EW RESEARCH CENTER’S PROJECT FOR
EXCELLENCE IN JOURNALISM, (Apr. 11, 2012), http://stateofthemedia.org/2012/
newspapers-building-digital-revenues-proves-painfully-slow.
26
GOOGLE NEWS, https://news.google.com (last visited Nov. 21, 2012); GAWKER,
http://gawker.com (last visited Nov. 21, 2012); H
UFFINGTON POST, http://www.
huffingtonpost.com (last visited Jan. 13, 2013); S
ALON, http://www.salon.com (last
visited Nov. 21, 2012).
27
See Lauren M. Gregory, Note, Hot Off the Presses: How Traditional Newspaper
Journalism Can Help Reinvent the “Hot News” Misappropriation Tort in the Internet
Age,” 13 V
AND. J. ENT. & TECH. L. 577, 582 (2011).
C07_MARIMON (DO NOT DELETE) 5/17/2013 12:56 PM
2013] NEWS INDUSTRY AND NEWS AGGREGATORS 1447
that nearly 75,000 websites reuse newspaper content from all over
the country without permission.
28
As one scholar explains, this
“forces one news outlet to absorb the cost of news-gathering, while
the other capitalizes on the output for free.”
29
At a surface level, a news aggregator is simply a website that
culls information from many sources and displays it at a single
place.
30
However, within that definition there is a myriad of
different types of aggregating sites. Some make the distinction
between pure aggregators and parasitic aggregators.
31
Pure
aggregators use headlines and a minimal amount of the text,
linking the reader back to the original source.
32
Parasitic
aggregators, on the other hand, use the content to rewrite and
publish it as their own.
33
However, these definitions, while
evocative of what the ultimate dispute is between aggregators and
content generators, does not comprehensively describe all of the
aggregating sites available today. The Citizen Media Law Project
has outlined four types of aggregators: feed aggregators, specialty
aggregators, user-curated aggregators, and blog aggregators.
34
The
distinctions are useful in understanding the legal perspective on the
issue. Feed aggregators are similar to the pure aggregators
mentioned above, including a few lines of the lede and a link to the
original news story.
35
The specialty aggregators are similar but
focus on one topic rather than an array.
36
User-curated aggregators
are websites like Digg, where content is derived from user-
28
See id.
29
Id.
30
KIMBERLY ISABELL & THE CITIZEN MEDIA LAW PROJECT, THE RISE OF THE NEWS
AGGREGATORS: LEGAL IMPLICATIONS AND BEST PRACTICES, 2 (Berkman Center or
Internet & Society at Harvard University) (2010), available at http://www.
citmedialaw.org/sites/citmedialaw.org/files/news%20aggregation%20white%20paper.
pdf.
31
Richard T. Kaplar, More on Newspapers and Aggregators, MEDIA INSTITUTE (Aug.
26, 2009), http://www.mediacompolicy.org/2009/08/articles/copyright/more-on-
newspapers-and-aggregators.
32
See id.
33
See id.
34
See Isabell, supra note 30, at 2–5.
35
See id. at 2.
36
See id. at 3.
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1448 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 23:1441
submissions and comes from a wide variety of sources.
37
Finally,
blog aggregators find themselves at the other end of the spectrum,
most succinctly embodying the parasitic model described above.
“Blog aggregators are websites that use third-party content to
create a blog about a given topic.”
38
Examples of blog aggregators
include websites like Gawker and The Huffington Post.
39
The
content is sometimes used as the basis for original blogger-written
articles composed of information culled from various sources, with
links back to the original articles throughout.
40
Other times they
are short summaries of original articles with links to the
originals.
41
The crux of the competition is the ability of these sites to divert
readership from content generators. Commentators from the
Columbia Tow Center for Digital Journalism say “[t]he definition
of a competitor now is someone who gives away your story for
free.”
42
News aggregators compile news articles and distribute
them to consumers through their websites, often times repackaging
work that may have taken days to produce into a few sentences that
take mere minutes to write.
43
In the race to gain views online,
aggregators often win.
44
While newspapers and other print sources
are still struggling to profitably incorporate themselves into the
online world, news aggregators dip into their revenues by
siphoning off possible readership from main news generators.
45
Aggregators also provide an outlet for otherwise unheard voices
and bring together engaged audiences, all at minimal costs.
46
Interestingly, original content sites and aggregator sites are used in
much the same way by users, meaning that heavily-reported stories
37
See id. at 4.
38
Id at 5.
39
Id.
40
See id.
41
See id.
42
GRAVES, GRUESKIN & SEAVE, supra note 25, at 3.
43
See id. at 84–86 (presenting a compelling example of how a feature story on New
York Magazine is shortened and repackaged into a blurb for The Huffington Post).
44
See id. at 13.
45
See id. at 83.
46
See id.
C07_MARIMON (DO NOT DELETE) 5/17/2013 12:56 PM
2013] NEWS INDUSTRY AND NEWS AGGREGATORS 1449
will get the same engagement from readers regardless of the news
provider.
47
In order to fight this battle against new aggregators, apart from
bringing lawsuits, the Associated Press and 28 other news
organizations launched a partnership licensing organization in
2011 called NewsRight.
48
The company established a system
called News Registry for collecting royalties from aggregators.
49
The system registers professionally-edited news items across
thousands of websites.
50
“NewsRight will begin slowly, asking
commercial enterprises that scrape stories and sell online news
digests to business clients to pay licensing fees.”
51
The enterprise
hopes in time to incorporate larger news aggregators and to expand
beyond text to include photos, video and international markets.
The information will enable publishers to pursue different
outcomes, including seeking legal remedies.
52
NewsRight tracks
the reuse of articles, but does not in any way own a stake in legal
proceedings from such.
53
David Westin, formerly of ABC News
and now the CEO of News Right said, “[w]e’re not a litigation
shop.”
54
NewsRight is in the business of developing contracts and
business relationships among news organizations.
55
Ideally, the
effort would allow news organizations to collect fees from both
digital subscriptions and from the “expanding aggregation
sector.”
56
Opponents argue that the Associated Press is leading a
war against the “democratization of distribution” provided by the
Internet, a direct reaction to their inability to adapt to the new
47
See id. at 84–86.
48
See Staci D. Kramer, NewsRight Launches with 29 Publishers: “Not a Litigation
Shop,”
PAIDCONTENT (Jan. 5, 2012), http://paidcontent.org/2012/01/05/419-newsright-
launches-with-29-publishers-not-a-litigation-shop.
49
See Edmonds, supra note 25.
50
News Registry also measures consumption of content online. It provides publishers
and content users with information on how content is being used and facilitates licensing
opportunities. See N
EWS RIGHT, http://www.newsright.com/About (last visited Jan. 13,
2013).
51
Id.
52
See id.
53
Kramer, supra note 48.
54
Id.
55
See id.
56
Edmonds, supra note 25.
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1450 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. [Vol. 23:1441
online market.
57
Writer Matthew Ingram see it more as declaring
war, “[t]he AP seems determined to . . . do whatever it can to
maintain control over its content and the scarcity that is at the core
of its business model just as newspaper owners like Rupert
Murdoch are trying to do with pay walls and other gates around
their information.”
58
However, the question of whether aggregation is legal has
never been answered.
59
Without an answer from the courts, two
remedies remain available for the industry: copyright and hot news
misappropriation.
60
Over the last few years, the hot news doctrine
has had a slight rebirth.
61
The doctrine, which arose from the turn
of the century case involving wire services Associated Press and
International News Service, is being increasingly alleged in cases
against online aggregators of content. The most recent case,
Barclays v. Theflyonthewall.com involved financial companies
bringing suit against a website compiling stock recommendations
made by the investment companies
62
—not exactly what the
doctrine was originally intended to protect. Furthermore, after
these recent developments it is no longer clear whether hot news is
a viable option for the industry to use as protection against
competition from news aggregators.
B. The Trouble with the Newspaper Industry
To understand what threat news aggregators present to
traditional media sources, it is helpful to acknowledge the slow
decline the industry has been suffering since the advent of online
platforms.
63
News organizations, providing original journalism or
57
Matthew Ingram, Did the AP just declare war no news aggregators?, GIGAOM (Feb.
14, 2012, 11:24 A.M.), http://gigaom.com/2012/02/14/did-the-ap-just-declare-war-on-
news-aggregators.
58
Id.
59
See Isabell, supra note 30, at 3.
60
Id. at 8.
61
See Associate Press v. All Headline News Corp., 608 F.Supp. 2d 454, 459 (S.D.N.Y.
2009); Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 843 (2d Cir. 1997);
Barclays Capital Inc. v. Theflyonthewall.com, 700 F.Supp. 2d 310, 313 (S.D.N.Y. 2010).
62
See Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876, 878–80 (2d
Cir. 2011).
63
See Isabell, supra note 30, at 1.
C07_MARIMON (DO NOT DELETE) 5/17/2013 12:56 PM
2013] NEWS INDUSTRY AND NEWS AGGREGATORS 1451
“independent fact-finding undertaken for the benefit of
communities of citizens”
64
have faced cutbacks not only to
advertising revenues and circulation sales, but also to the number
of staff and markets.
65
Industry analysts argue that without the
independent reporting that “provides information, investigation,
analysis, and community knowledge,” citizens will not receive the
information they need.
66
News is valued for is its watchdog
capability, ideally keeping factions of society accountable for their
actions.
67
Aggregators fail to fill the void left by decreased
coverage because of the lack of in depth investigation; however,
many argue that silencing aggregators in turn means silencing a
faction of the public’s voice.
68
It is no secret that media outlets, including newspapers,
magazines, and television news networks, have undergone a major
shift in their production, management, and distribution over the
last fifteen years.
69
Throughout the
nineteenth century, newspapers
followed industrialization, urbanization and “big-city retail
economy.”
70
With growing urban populations and the advent of
mass production, big profits were made selling advertising space
for broad generally applicable advertisements targeted to the
culturally diverse multitude of people living, working, and,
perhaps most importantly, shopping in large cities.
71
Today, the
abundance of commerce conducted online means the news industry
is faced with a new audience model; rather than being broad, it is
64
GRAVES, GRUESKIN & SEAVE, supra note 25, at 3.
65
Id.; see also Leonard Downie, Jr. & Michael Schudson, The Reconstruction of
American Journalism, C
OLUMBIA JOURNALISM REVIEW (Oct. 19, 2009),
http://www.cjr.org/reconstruction/the_reconstruction_of_american.php? page=1.
66
Downie & Schudson, supra note 65.
67
See id.
68
See id.
69
See generally GRAVES, GRUESKIN & SEAVE, supra note 25 (arguing that newspapers
present the best example of what has occurred to the entire media industry).
70
Id. at 9.
71
See id. High profits from this model led to an industry dependence on this source of
revenue rather than circulation. Interestingly, “historians of journalism argue that these
economic and political shifts underpinned an increasingly professionalized and objective
journalism that became the norm in the 1920s and 1930s.” Id. This is a norm this Note
supports as the true watchdog quality of the industry.
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localized and niched.
72
Because of this, advertising models have
changed. However, digital advertising revenue has not come close
to filling the gap left by losses in traditional revenue streams.
73
What was a $59.2 billion industry in 2000 is down to less than $34
billion a year.
74
Overall, the lag in revenues has led to a shrinking of the
industry, but most worrisome is the shrinking of the amount of
news that is covered.
75
Statistics show there is less coverage of
government topics in suburbs and remote cities.
76
State
government coverage is also suffering.
77
Beats like science and
religion have all but disappeared, and weekdays editions contain
fewer feature-length articles.
78
The financial, political, and wire-
service sectors, however, remain strong.
79
With a smaller
workforce, the industry increasingly turns to citizen journalists and
bloggers, bringing some to say the industry is suffering from an
overall “de-skilling” of journalism.
80
The industry is increasingly
being asked to make vital choices about what investments to make
in the collection of news.
To fight the loss of revenue, newspapers have recently begun
to institute pay walls for their online content.
81
In 2011, the New
York Times finally introduced a payment system for their online
72
See id. at 41. Theorists argue that the way to create more value for audiences is to
differentiate through localization, by geographical locations and by topical interests.
“The most effective way to [differentiate] is to create value through local coverage that is
linked to the lives, aspirations, and understanding of individuals in the locations in which
they live.” Id.
73
See Edmonds, supra note 25. The Newspaper Association of America found that,
while online advertising was up $207 million compared to 2010, print advertising was
down by $2.1 billion. The losses were greater than the gains 10 to 1. See also Trends and
Numbers, N
EWSPAPER ASSOCIATION OF AMERICA (Mar. 14, 2012) http://www.naa.org/
Trends-and-Numbers/Advertising-Expenditures/Annual-All-Categories.aspx.
74
Edmonds, supra note 25.
75
See Downie & Schudson, supra note 65.
76
See Edmonds, supra note 25.
77
See Downie & Schudson, supra note 65 (noting that he number of newspaper
reporters covering state capitals full-time fell from 524 in 2003 to 355 at the beginning of
2009).
78
See id.
79
Edmonds, supra note 25.
80
See id.; Downie & Schudson, supra note 65.
81
See Edmonds, supra note 25.
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content;
82
the slightly complicated system allows users to access
10 articles for free every month.
83
However, the shift from a world
where users were never asked to pay for content to a digital pay
wall world could mean a decrease in users for many sites, although
systems implemented through handheld devices may prove to be
successful in boosting readership.
84
The industry faces the ever-
looming problem of figuring out how to monetize these new
platforms.
85
Advertising on these digital platforms remains
unsecure.
86
Readership numbers can often be inflated because
users may be counted several times by using multiple devices such
as a laptop, smartphone, and tablet.
87
Furthermore, these new
technological devices bring with it a divergence in presentation,
requiring a different format or appearance on each platform.
88
C. Hot News Doctrine Reel
1. Rewind: Hot News Comes on the Screen
The hot news doctrine originated in the Supreme Court’s
International News Service v. Associated Press case of 1918.
There, the Court upheld an injunction against International News
Service (“INS”) preventing the wire service from using Associated
82
See id.
83
GRAVES, GRUESKIN & SEAVE, supra note 25, at 77 (explaining that approximately
150 mid-sized and metro dailies have also instituted similar metered models, including
The Boston Globe, The Dallas Morning News, and The Star Tribune of Minneapolis,
while notable holdouts include The Washington Post and USA Today).
84
See id. at 79–81. However, advertising on these new platforms remains unsecure
and the industry will have to develop a system for monetizing these handheld platforms, a
feat made more difficult because of the competition posed by technology giants like
Google, Facebook, and Apple.
85
Edmonds, supra note 25 (stating nearly a quarter of adults in the United States
receive their news from at least two platforms, usually through websites and website
applications for news sources).
86
See id.; see also GRAVES, GRUESKIN & SEAVE, supra note 25, at 130 (explaining that
trying to compete for ads in a market dependent on volume is impossible against
behemoths like Google and Facebook. Google and Facebook manage to control most of
the online advertising, while the growth of discount programs like Groupon in the last
few years has managed to steal local merchant advertising from many newspapers and
their websites).
87
GRAVES, GRUESKIN & SEAVE, supra note 25, at 21.
88
See id. at 55.
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Press news until the commercial value of the news had passed
away (this concept is known as the “time value” of the news).
89
As
World War I was coming to a close, INS was blocked by foreign
nations from gathering and transmitting news back to the United
States after papers receiving INS wire service printed news of the
sinking of the British battleship Audacious and “described London
as being in flames”
90
In order to maintain a competitive edge, INS
began bribing AP employees, gathering news stories from bulletins
where AP posted stories, and collecting early edition papers
containing these stories.
91
INS was then able to telephone or
telegraph news they had not gathered to their papers in the West
Coast, effectively beating AP to the newsstands.
92
The suit filed by the Associated Press made it to the Supreme
Court, where the Court determined the defendant was acquiring
work produced “by complainant as the result of organization and
the expenditure of labor, skill, and money, and which is salable by
complaint for money, and that defendant in appropriating it and
selling it as its own is endeavoring to reap where it has not
sown.”
93
This reap what it has not sown mentality touched on
Lockean property theories, instilling in the news a property value
that comes from the expenditure of labor in gathering the
information. The gathering of news was an act of labor creating
value belonging to the actor who expended it. The court made one
clear distinction, “ [t]he peculiar value of news is in the spreading
of it while it is fresh; and it is evident that a valuable property
interest in the news, as news, cannot be maintained by keeping it
89
Int’l News Serv. v. Associated Press, 248 U.S. 215, 245–46 (1918). The Court, in
addressing the terms of the injunction, admitted the terms were ambiguous or indefinite
but felt it lacked information to formulate more specific terms and upheld the decision of
the District Court.
90
News Pirating Case in Supreme Court, N.Y.TIMES (May 3, 1918), available at
http://query.nytimes.com/mem/archive-free/pdf?res=F50D1FF6345B11738DDDAA089
4DD405B888DF1D3 (describing from oral arguments presented before the Supreme
Court the reasons for why INS was blocked).
91
Int’l News Serv., 248 U.S. at 238.
92
Id.; see also Gregory, supra note 27.
93
Int’l News Serv., 248 U.S. at 239. In other words, the Court determined the
Associated Press was expending resources into gathering news and International News
Service was misappropriating the profits rightfully belonging to the Associated Press by
presenting the content as their own.
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secret.”
94
They were using to their advantage the peculiar features
of “novelty and freshness” that are so vital to the success of the
news industry.
95
The Court granted the news industry its now
famous “quasi property” right because of the time value of news.
96
In light of all the property attributions, Professor Shyamkrishna
Balganesh, from the University of Pennsylvania Law School,
describes the hot news doctrine as existing under a property myth,
one that originates from the language of International News
Service v. Associated Press.
97
Justice Pitney writes in INS, “he
who has fairly paid the fair price should have the beneficial use of
the property.”
98
However, in reality the court determined that a
misappropriation of the information by a competitor was an
exercise of unfair competition.
99
To clarify, the Court explained it
did not create a monopoly right per se in the news but limited or
“postpone[d]” the participation of competitors in the “distribution
and reproduction of news that it [had] not gathered, and only to the
extent necessary to prevent that competitor from reaping the fruits
of complainant’s efforts and expenditure.”
100
The monopoly lasts
“until its [the news’] commercial value as news to the complainant
and all of its members has passed away.”
101
This was to ensure AP
was granted enough “lead time to profit from its
entrepreneurship.”
102
The lead time was a way to ensure a
preservation of the incentives to “produce socially useful
services.”
103
The Court feared a scenario where society would
suffer because the industry was left profitless, an interesting point
94
Id. at 235.
95
Id. at 238.
96
Id. at 235–36.
97
See Shyamkrishna Balganesh, “Hot News”: The Enduring Myth of Property in
News, 111
COLUM. L. REV. 419, 425–26 (2011).
98
Int’l News Serv., 248 U.S. at 240.
99
Id.
100
Id. at 241.
101
Id. at 245 (affirming the decision and language used by the Circuit Court of Appeals,
the Court indicates it shares the concerns about this clause and agrees the terms of the
injunction could have been more specific and framed to contain the protection as long as
reasonable, not indefinitely).
102
See Gregory, supra note 27, at 588.
103
Barclays Capital Inc. v. Theflyonthewall.com, 700 F.Supp.2d 310, 332 (S.D.N.Y.
2010).
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in light of the current situation facing the news industry. The
dissent, on the other hand, focused on the free flow of ideas,
insisting that the creations, inventions, and discoveries imbued
with property rights were those properly protected under copyright
and patent law.
104
Justice Brandeis was against any limitation on
the free flow of information and felt this property right should
come from Congress, not the Court.
105
2. The Road to Barclays: NBA v. Motorola
Leading up to the recent developments in the hot news
doctrine, the Second Circuit decided National Basketball
Association v. Motorola,
106
where it defined a misappropriation
remedy still in existence outside the copyright doctrine.
107
The
case involved two similar services by the National Basketball
Association and Motorola that provided updates of professional
basketball games. The court ultimately determined that NBA did
not have a hot news claim. The court held that the hot news
doctrine survived in limited cases.
108
A hot news doctrine claim
was defined as pertinent 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 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”.
109
The prior New York state iterations of the
misappropriation tort were considered too broad for the purposes
of the preemption intended by Congress through the Copyright Act
104
Int’l News Serv., 248 U.S. at 250.
105
Id. at 266.
106
Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997).
107
Id. at 843.
108
Id.
109
Id. at 845.
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of 1976.
110
Consequently, the court outlined what it felt was a
narrow misappropriation tort that would survive preemption.
111
The confusion in the case begins when the court incorporated
the extra-element test intended to determine whether the Copyright
Act preempts the work in question. This three-step test consists of
“(i) the time-sensitive value of factual information, (ii) the free-
riding by a defendant, and (iii) the threat to the very existence of
the product or service provided by the plaintiff.”
112
The court
reasoned that failing to preempt claims based on misappropriation
of underlying facts would expand the reach of the state law
claims.
113
Congress intended for the underlying facts to be a part
of the public domain.
114
In the case that there is an extra element,
beyond the mere act of reproduction, then the state claim cannot be
said to lie within the general scope of copyright, and there can be
no preemption.
115
3. The Slow Death of the Hot News Doctrine: Barclays v.
Theflyonthewall.com
Barclays v. Theflyonthewall.com involved a suit brought by
several investment firms (the “Firms”) against
Theflyonthewall.com alleging hot news misappropriation and
copyright infringement.
116
Theflyonthewall.com (“Fly”) “is an
internet subscription news service that aggregates and publishes
research analysts’ stock recommendations along with many other
items of varying interest to investors.”
117
The Firms were
110
Id. at 852; see also infra notes 147–48 and accompanying text; Copyright Act of
1976, 17 U.S.C. §§ 101–810 (2006).
111
Nat’l Basketball Ass’n, 105 F.3d at 852.
112
Id. at 853.
113
Id. at 849.
114
Id.
115
Id. at 850 (holding for Motorola because the company was expending its own funds
to collect the information they were later distributing through their own product) (citing
Computer Assoc. Int’l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992)).
116
Barclays Capital Inc. v. Theflyonthewall.com, 700 F.Supp.2d 310, 313 (S.D.N.Y.
2010). The investment firms included Barclays Capital, Merrill Lynch, and Morgan
Stanley, collectively referred to as the “Firms.”
117
Id.; see also id. at 322–25 (quoting from the website of Theflyonthewall.com). Fly
provided investment and trading news to subscribers, assigning different levels of access
to correspond with different membership levels. The newsfeed capabilities allowed users
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primarily in the business of facilitating trades on behalf of their
clients, and in this capacity they generated trading reports for their
clients.
118
The reports typically included a variety of “projections
of future stock prices, judgments about how a company will
perform relative to its peers, and conclusions about whether
investors should buy, sell, or hold stock in a given company,”
119
including recommendations for upgrading or downgrading a
security, and predictions about changes in target prices of
securities.
120
These recommendations were released to customers
between midnight and seven in the morning, prior to the opening
of markets, making timely access “a valuable benefit to each
Firm’s clients, because the Recommendations can provide them an
early informational advantage.”
121
The reports were the work of
hundreds of employees and they cost hundreds of millions of
dollars worth of research to produce.
122
In order to ensure the
investment paid off, the timely distribution of the reports was
crucial to initiating trades right away.
123
Customers tended to
initiate trades with the Firms in order to quickly reap the benefits
of the recommendations found in the reports.
124
Fly incorporated recommendations published by the Firms into
their newsfeed content. In a very INS-like method, they relied on
employees at the Firms to give them access to the reports.
125
As of
2006, Fly was posting recommendations up to one hour before the
opening of the market and other media outlets.
126
The Firms
accused Fly of free riding on their efforts by disseminating timely
market information, and of unfair competition, because their
dissemination of the information diverted potential trades from the
to filter information not only through headline topics, but also through individual
searches.
118
Id. at 315.
119
Id.
120
Id. at 316.
121
Id.
122
Id.
123
Id. at 319.
124
Id.
125
Id. at 325
126
Id. at 327.
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Firms.
127
With access to information from other sources like
Theflyonthewall.com, traders would be less likely to place trades
with the Firms.
128
The district court applied the five-step test from NBA,
ultimately determining that the actions of Fly constituted a
misappropriation of the Firms’ property.
129
The only costs
incurred by Fly were the costs of lifting the recommendations from
the Firms’ reports.
130
Fly tried to convince the court to apply a
“head-to-head” competition analysis, but the court ignored them.
131
Finally, the court determined they only needed to show the activity
would likely threaten a plaintiff’s ability to continue to participate
in the market.
132
In coming to this conclusion, the district court
determined that “the purpose of the INS tort, like the traditionally
accepted goal of intellectual property law more generally, is to
provide an incentive for the production of socially useful
information without either under-or over-protecting the efforts to
gather such information.”
133
The court issued an injunction against
Theflyonthewall.com preventing them from publishing this
information until a half-hour after the opening of markets.
134
On appeal, however, the Second Circuit changed everything.
The Second Circuit, on appeal, overturned the decision handed
down by the Southern District of New York.
135
Many agree that
the final conclusion reached by the Second Circuit to overturn the
district court was the correct one.
136
“The Second Circuit went to
127
See generally id. at 318–20.
128
Id.
129
Id. at 335–43. The cost of generating the reports, as already mentioned, went up
into the hundreds of millions. Fly also did not dispute the timeliness of the
recommendations. The court determined the core of Fly’s business was free riding.
According to the court, for the purposes of direct competition the primary business of
both Fly and the Firms was the dissemination of the recommendations. Finally, the court
determined that the Firms incentive to produce recommendations was threatened.
130
Id. at 336.
131
Id. at 340.
132
Id. at 341.
133
Id. at 344.
134
Id. at 347.
135
Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876 (2d Cir. 2011).
136
See Ray Hashem, Barclays v. Thefly: Protecting Online News Aggregators from the
Hot News Doctrine, 10 NW. J. TECH. & INTELL. PROP. 37 (2011); see also Shyamkrishna
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significant lengths to cabin the reach of the doctrine quite
considerably, despite reiterating that it was not abrogating it
altogether.”
137
Specifically, the Second Circuit determined that
federal copyright law preempted the hot news claim brought by the
Firms against Fly.
138
While rejecting the determination of the
district court that there was a hot news claim, the Second Circuit
expressed the continued binding effects of NBA and the existence
of a hot news misappropriation tort under New York law.
139
They
couched this within an extensive look at what was wrong with the
hot news doctrine. Preemption, the court noted, often includes
material that is un-copyrightable (i.e., facts) but applies as long as
the work as a whole satisfies the subject matter requirement.
140
In
reviewing the NBA preemption analysis, a preempted claim is
defined as one that “seeks to vindicate ‘legal or equitable rights
that are equivalent’ to one of the bundle of exclusive rights already
protected by copyright law under 17 U.S.C. § 106—the ‘general
scope requirement’; and [] if the work in question is of the type of
works protected by the Copyright Act under 17 U.S.C. §§ 102–
103—the subject matter requirement.”
141
That being said, the
court accepted that Congress intended that an INS hot news claim
survive, but more as a tort theory than as a precedent.
142
The Second Circuit, for the purposes of the hot news doctrine,
determined that the test set out in NBA was dicta and not a holding
Balganesh, The Uncertain Future of “Hot News” Misappropriation After Barclays
Capital v. Theflyonthewall.com, 112
COLUM. L. REV. SIDEBAR 134 (2012).
137
See generally Balganesh, supra note 136, at 136–41 (outlining three different factors
where the Second Circuit ineffectively analyzed the hot news doctrine. (1) The court
began its analysis with obvious doubt that the doctrine was still viable and reluctant to
disclaim it. (2) They denied the viability of the NBA test by deeming that it was dicta. In
holding that the test was dicta they also deemed it inconsistent, unreliable, and
unnecessary to the decision in NBA. (3) Finally, in denying the NBA test and not
presenting a formulation of its own the court was essentially rejecting the hot news
doctrine).
138
Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876, 878 (2d Cir.
2011).
139
Id. at 890–91.
140
Id. at 892 (quoting Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841 (2d Cir.
1997)).
141
Id. (internal numbering omitted) (quoting Nat’l Basketball Ass’n v. Motorola, Inc.,
105 F.3d 841 (2d Cir. 1997)).
142
Id. at 894.
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upon which the Second Circuit, or other courts, were expected to
adhere.
143
The inconsistencies in the test made them hard to apply,
not only to the facts in NBA, but also to the facts of this case (as
they were applied by the district court).
144
Moreover, the Second
Circuit was not deciding upon the issue of hot news, but rather on
preemption, meaning the test was not a part of the holding but
simply an extended discussion by the court on a possible means of
applying the hot news doctrine.
145
In light of this, the hot news
doctrine exists only as the ghostly presence of INS and in that very
limited capacity.
146
In finding the claims were preempted, the court found it was
not determinative that the facts in the recommendations were not
copyrightable.
147
They also determined that the “reports together
with the recommendations fulfill the general scope requirement
because the rights “may be abridged by an act which, in and of
itself, would infringe one of the exclusive rights’ provided by
federal copyright law.”
148
Furthermore, the claims were not
sufficiently like an INS claim that they would survive preemption.
The Second Circuit in applying the NBA test determined that Fly
was not free riding because the facts being misappropriated by Fly
were that the Firms had made recommendations about securities.
This led the court to reason that “[t]he Firms are making the news;
Fly, despite the Firms’ understandable desire to protect their
business model is breaking it.”
149
The matters and facts that make
up the news are publici juris,
150
or similarly a part of the public
domain, and while the hot news doctrine may have the effect of
creating some legal interest in these facts, the court here
determined that the Firms were creating the news using their
expertise and knowledge; in other words, they were not gathering
143
Id. at 901.
144
Id. at 901–02.
145
Id.
146
Id. at 894.
147
Id. at 843.
148
Id. at 902 (quoting Computer Assocs. Int’l, Inc. v. Altai, Inc., 928 F.2d 693 (2d Cir.
1992)).
149
Id.
150
See Int’l News Serv. v. Associated Press, 248 U.S. 215, 234 (1918); see also id. at
903.
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the information through efforts like reporting.
151
Finally and
crucially, the information in the recommendations was being
attributed to their source because without it the information would
have been worthless to Fly without it.
152
The court ultimately
reduced the NBA test to one question: is the behavior in question
free-riding and if not is it preempted?
153
The opinion provides
little guidance to lower courts for applying the limited hot news
doctrine in the future.
154
D. Relations of a Sort: Hot News and Copyright
The Supreme Court’s decision in Erie Railroad Co. v.
Tompkins effectively did away with federal common law.
155
“Except in matters governed by the Federal Constitution or by acts
of Congress, the law to be applied in any case is the law of the
state.”
156
And so International News Service v. Associated Press, a
child of the federal common law, was in a sense swept away by the
decision in Erie. While technically no longer “good law” at the
federal level, states retained the doctrine known as the hot news
doctrine as a part of their misappropriation tort law, and the
reasoning in INS was still cited in many cases.
157
Pennsylvania,
New York, and California have continued to uphold general
misappropriation torts after Erie and after the Copyright Act of
1976, even going so far as to apply it outside the news scenario.
158
From the 1950s to the 1980s, the doctrine developed in many states
into a general INS-based misappropriation doctrine that was
applied in subscription-based television programming (i.e., HBO),
financial data, and recorded music cases.
159
Other states decided to
151
Barclays, 650 F.3d at 903.
152
Id.
153
Id. at 906–07. Interestingly, the concurring opinion came to the same determination
by applying the NBA test. The concurrence specifically applied the direct competition
test more narrowly. There could be no direct competition because Fly was reporting all
recommendations not only the ones that would lead to trades. Id. at 908–12 (Raggi, J.,
concurring).
154
See Balganesh, supra note 136, at 135.
155
Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938).
156
Id.
157
Gregory, supra note 27, at 588.
158
Id.
159
Id. at 589.
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limit the strength of the doctrine to scenarios that were similar to
INS, specifically cases in which one party was attempting to
misrepresent and pass off their competitor’s product as their
own.
160
Other states rejected the tort theory altogether, reasoning,
for example, “[e]xcept where there has been a breach of trust of
contract . . . it is not unfair competition in Massachusetts to use
information assembled by a competitor.”
161
An important consideration remains—facts alone are not
protected by copyright law. The Supreme Court affirmed this in
Feist Publications Inc. v. Rural Telephone Service Co,
162
where the
Court asserted two things: “[t]he first is that facts are not
copyrightable; the other, that compilations of facts generally
are.”
163
Feist revolved around whether telephone directories,
produced as a result of a Kansas regulation requiring telephone
companies to issue telephone directories, were copyrightable.
164
The Court made it clear that there was no such protection for this
information under the Copyright Act of 1976.
165
Concerning fact-
based works, the touchstone of the Act is not a sweat of the brow
theory, but rather originality.
166
The Court rejected the sweat of
the brow
167
theory because it felt that it would prevent authors
from relying on facts contained in prior works.
168
This rationale,
160
See Herald Publ’g Co. v. Fla. Antennavision, Inc., 173 So. 2d 469, 474 (Fla. Dist.
Ct. App. 1965) (“‘In conclusion, we hold that unless appellees are able to demonstrate a
protectible interest by virtue of the copyright laws or bring themselves within the
contemplation of some other recognized exception to the policy promoting free access to
all matter in the public domain, they cannot prevail.”); Loeb v. Turner, 257 S.W.2d 800,
803–04 (Tex. App. 1953) (holding that dissemination into the public made “news
available for comment and use, so far as any property right of appellant was concerned
information”).
161
Triangle Publ’ns, Inc. v. New Eng. Newspaper Publ’g Co., 46 F.Supp. 198, 203 (D.
Mass. 1942) (internal citations omitted).
162
Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 344 (1991).
163
Id.
164
Id. at 342–43 (explaining how Rural refused to license its listings to Feist and Feist
in turn used the information without consent, publishing the telephone information in
their own directories).
165
Id. at 359–60.
166
Id.
167
Id. at 359 (referring to the idea that “each subsequent compiler must start from
scratch and is precluded from relying on research undertaken by another”).
168
Id. at 353.
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the Court held, goes against the purpose of copyright, which is “to
promote the Progress of Science and useful Arts.”
169
The standard
for originality was not intended as a stringent standard; however,
as the Court found in Feist, an arrangement of facts must contain
some creative elements in order to obtain copyright protection.
170
The Court held that “[f]acts, whether alone or as part of a
compilation, are not original and therefore may not be copyrighted.
A factual compilation is eligible for copyright if it features an
original selection or arrangement of facts . . . .”
171
In a social
policy consideration, the Court feared creating a monopoly on
information rightly belonging to the public through an extension of
copyright protections.
172
In this light alone, copyright cannot
provide the kind of protection that the news industry is seeking.
The Copyright Act of 1976 again weakened the reach of the
hot news doctrine, this time at the state level. The Act provides
“copyright protection [for] original works of authorship fixed in
any tangible medium of expression.”
173
In order to receive this
protection a work must include “independent creation plus a
modicum of creativity.”
174
The Act grants exclusive rights to the
owner of the copyright while, at the same time, allowing for fair
use of the material for purposes such as criticism, comment, news
reporting, teaching, scholarship, or research.
175
Crucial to the
news industry is that their product originates from facts; and facts
do not meet the “originality” standard.
176
In other words,
infringement of another’s copyrighted material is a violation of the
Act and, thus, provides an adequate remedy for those who have
been infringed upon. In order to reduce confusion and
inconsistencies, the Act preempts
177
any claim that comes within
169
Id. at 349 (citing U.S. CONST. art. I, § 8, cl. 8).
170
Id. at 345.
171
Id. at 350.
172
Id. at 353–54.
173
17 U.S.C. § 102 (2006).
174
Feist, 499 U.S. at 340.
175
17 U.S.C. §§ 106, 107 (2006).
176
See Gregory, supra note 28, at 591.
177
17 U.S.C. § 301(2006) (“All legal and equitable rights that are equivalent to any of
the exclusive rights within the general scope of copyright as specified by section 106 in
works of authorship that are fixed in a tangible medium of expression and come within
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the general scope of copyright
178
and within the subject matter of
copyright.
179
This effectively did away with state copyright
remedies and further jeopardized the status of the hot news
doctrine.
The House Report accompanying passage of the Copyright Act
specifically addresses the issue of hot news preemption.
180
The
commentary clearly indicates that preemption was not the intention
of the bill.
181
Interestingly, misappropriation was originally
included in a list of exceptions to federal copyright law, but it
never made it onto the final version of the Act.
182
That being said,
the hot news doctrine still maintains a precarious position in
opposition to copyright. It fills a void left by copyright, while at
the same time being completely outside the bounds of copyright,
because the true hot news claim is an unfair competition claim—
not a property right as associated with copyright. The issue of
preemption continues to plague the hot news doctrine, even though
the doctrine was specifically intended to remain as a viable remedy
for plaintiffs.
E. It’s Alive: Hot News Continues to Exist in Jurisdictions
Surprisingly, the hot news doctrine has managed to survive in
certain jurisdictions as a part of the common law tort doctrine of
the subject matter of copyright as specified by sections 102 and103, whether created
before or after the date and whether published or unpublished, are governed exclusively
by this title. Thereafter, no person is entitled to any such right or equivalent right in any
such work under the common law or statutes of any State.”).
178
17 U.S.C. § 106 (2006).
179
17 U.S.C. §§ 102–103 (2006).
180
H.R. REP. NO. 94-1476, at 24 (1976) (Misappropriation is not necessarily
synonymous with copyright infringement, and thus a cause of action labeled as
“misappropriation” is not preempted if it is a fact based neither on a right within the
general scope of copyright as specified by section 106 nor on a right equivalent thereto.
For example, state law should have the flexibility to afford a remedy (under traditional
principles of equity) against a consistent pattern of unauthorized appropriation by a
competitor of the facts (i.e., not the literary expression) constituting “hot” news, whether
in the traditional mold of International News Service v. Associated Press (citation
omitted), or in the newer form of data updates from scientific, business, or financial data
bases.).
181
Id.
182
Gregory, supra note 27, at 595.
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unfair competition.
183
In a case very similar to the recent claim
filed against Meltwater by the Associated Press, the AP brought
suit in the Southern District of New York against All Headline
News Corp, an online venture in the business of distributing news
reports to customer websites.
184
These included reports of
breaking news collected from original content produced by the
Associated Press. The AP alleged that All Headline News would
pay “reporters to remove or alter the identification of the AP as
author or copyright holder of the articles” and subsequently
distribute these articles as their own product, free-riding on AP’s
original reporting.
185
The court, upon a determination that New
York law applied, did not dismiss the claim, following the Second
Circuit predecessor to Barclays, National Basketball Association v.
Motorola. “Hot news misappropriation is ‘a branch of the unfair
competition doctrine not preempted by the Copyright Act
according to the House Report.’”
186
A case from the same year, Scranton Times L.P v. Wilkes-
Barre Publishing Company, from the Middle District of
Pennsylvania, also upheld the view in NBA v. Motorola.
187
There,
the defendant published a newspaper in Wilkes-Barre,
Pennsylvania. The Scranton Times alleged that the defendants
were copying obituaries from their newspapers and website.
188
The court found that the misappropriation claim was preempted
because the plaintiff did not show how it was losing business due
to the defendant’s activity.
189
More importantly, the court also
took into account the extra-element test that was described in
NBA.
190
Likewise, in California, the extra-element test was applied
183
See Associated Press v. All Headline News Corp., 608 F.Supp.2d 454, 457
(S.D.N.Y. 2009); Scranton Times L.P. v. Wilkes-Barre Publ’g Co., 3:08-CV-2135, 2009
WL 585502, at *1 (M.D. Pa. Mar. 6, 2009); X17, Inc. v. Lavandeira, 563 F.Supp.2d
1102, 1103 (C.D. Cal. 2007).
184
All Headline News Corp., 608 F.Supp.2d at 458.
185
Id.
186
Id. at 461 (citing Financial Information, Inc. v. Moody’s Investors Service, Inc., 808
F.2d 204, 209 (2d Cir.1986)).
187
See 3:08-CV-2135, 2009 WL 585502 (M.D. Pa. Mar. 6, 2009).
188
Id. at *1.
189
Id. at *4.
190
Id. at *3.
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in the California case X17, Inc. v. Lavandeira.
191
X17, operator of
an online photo archive, brought suit against Mario Lavandeira,
better known as Perez Hilton of the celebrity gossip website
perezhilton.com. The suit alleged copyright infringement and hot
news misappropriation. The hot news allegation was based on the
time-sensitive nature of the photographs and the interest created in
publishing them first. In regards to preemption, this court
expressed,
[i]f under state law the act of reproduction,
performance, distribution or display, no matter
whether the law includes all such acts or only some,
will in itself infringe the state created right, then
such right is preempted. But if other elements are
required, in addition to or instead of, the acts of
reproduction, performance, distribution or display,
in order to constitute a state created cause of action,
then the right does not lie ‘within the general scope
of copyright,’ and there is no preemption.
192
The court determined there was a hot news case within the
facts and chose not to dismiss, thus recognizing the hot news
misappropriation doctrine under California law.
193
II. THE FUTURE OF HOT NEWS
The ambiguity left by Barclays begs the question, what
happens to the hot news doctrine now? Is it still viable, or should
the doctrine be left to wilt away? The Second Circuit is not alone
in its opinion that the hot news doctrine is on its way out.
However, with the industry in a precarious position, hot news still
serves a valuable purpose in providing the industry with a cause of
action against unfair competition. In light of the lack of direction
from the Second Circuit, it is valuable to consider several options
that have been presented to aid in reestablishing, and
strengthening, the hot news doctrine. Some present the idea that
191
X17, Inc. v. Lavandeira, 563 F.Supp.2d 1102 (C.D. Cal. 2007).
192
Id. at 1104–05.
193
Id. at 1109.
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hot news should be incorporated into federal law on its own or as a
part of the Copyright Act, while others propose changes to the
common law doctrine—a new hot news formulation. Still others
support the idea that the doctrine is fine as formulated in NBA, and
propose ignoring the Barclays decision. Realistically, the
implementation of all of them is not possible and each presents
some concerns in practice. While this discussion proceeds, the
industry continues to bring hot news claims, but to what end? At
one end, to possibly continue promoting and attempting to solidify
the doctrine within the American legal system, while at the other, it
is probably in the hope that they will be able to gain some ground
against news aggregators, turning the tide in their favor. In
shaping the future of hot news, the problems of the past are
understandably a major concern. To overcome the inconsistencies
in the doctrine, it is essential to simultaneously create a concrete
framework, while retaining a sense of flexibility to allow the
doctrine to adapt over time and account for changing technologies.
To this end, Part II.A addresses some concerns the hot news
doctrine faces in the legal world. Part II.B presents the option of
creating a federal misappropriation tort that would apply uniformly
throughout the nation. Part II.C presents the idea of incorporating
the hot news doctrine into the Copyright Act and addresses several
conceptual problems with this idea. Part II.D argues for the
implementation of a varied common law scheme, promoting a
more finely tuned NBA test.
194
Part II.E presents the idea of going
back to the original NBA test.
A. Concerns Post-Barclays in the Second Circuit
After Barclays, the Federal Trade Commission asked for
comment on the role of misappropriation in the news context.
“The idea, according to an FTC document circulated in June 2010,
is to create a policy that will allow news outlets that have the
infrastructure to gather news and the means to continue doing so in
an economically feasible manner.”
195
Three proposals have been
presented. One is to abolish misappropriation in favor of copyright
194
See infra Part I.C.ii.
195
Gregory, supra note 27, at 603.
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solutions.
196
A second is to amend the Copyright Act to encourage
misappropriation and prevent preemption.
197
Finally, suggestions
have been made to create a federal hot news tort, distinct from
copyright law.
198
Changes to the common law are also a possible
way of moving the hot news doctrine toward a more appropriate
framework.
199
The hot news doctrine has come against many dissenters,
particularly the American Law Institute. For these commentators,
like the American Law Institute and Judge Richard Posner, the hot
news doctrine has lost all value.
200
In the Restatement (Third) of
Unfair Competition, for example, the doctrine is discredited.
Section 38 of the Restatement explains that there is no general rule
of law that prohibits the appropriation of another’s ideas,
innovations, and other intangible assets once they become
publically known.
201
The decision in INS is in this view an unjust
restraint on competition. The ALI accepts that the doctrine could
be widely applicable against unjust enrichment, but argues that the
doctrine is better applied in the narrow setting of INS.
202
Shyamkrishna Balganesh, a professor at the University of
Pennsylvania School of Law, argues that the common law has been
called upon to protect the traditional business models of
information industries, like newspapers, that have been hurt by the
digital age.
203
The common law, while facially adaptable, also
needs to change to remain significant.
204
Professor Balganesh
provides three possible options for the common law: “(i) create
new law in an effort to take account of the new reasons and
contexts, (ii) abdicate the doctrinal areas in question to the
196
Id.
197
Id.
198
Id.
199
See infra Part II.D & Part II.E.
200
See RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 38 cmt. b (1995); see also
Richard Posner, Misappropriation: A Dirge, 40 HOUS. L. REV. 621, 641 (2003) (stating
that “[c]larity of analysis would be enhanced if the [misappropriation] doctrine and the
very word were banished from discussions of intellectual property law.”).
201
RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 38 cmt. b (1995).
202
See id. cmt. c.
203
Balganesh, supra note 136, at 136, 143.
204
Id. at 143.
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legislature on the theory that ‘[c]ourts are ill-equipped’ to the task,
or (iii) proceed with caution, enabling the law to fully grapple with
the new context, before moving in either direction.”
205
The Second
Circuit took this last path in deciding Barclays, doing nothing to
expand or to diminish the doctrine.
206
Instead of moving in any
clear direction, the court left the doctrine vague and lifeless.
The hot news doctrine has had a varied past and the tort of
misappropriation remains unpopular with many.
207
Yet as law
suits in the last few years have shown, the newspaper industry
considers the doctrine a plausible remedy against aggregators.
208
Along with copyright, it is one of the only legal solutions left for
the industry.
209
However, the shape in which the Second Circuit
left the doctrine and its failure to adequately describe how the
doctrine functions under its holding leaves the future of hot news
ambiguous. Some have gone as far as to say that the court, in
failing to outline how the doctrine survives, is attempting to slowly
do away with hot news misappropriation altogether.
210
In light of
this, several possible changes and solutions have been put forth,
which range from federal action to a complete redefining of the
common law doctrine. As always, the possibility remains that the
doctrine is no longer viable as a remedy for the current industry.
B. A Return to the Federal Field
One option would be to follow Justice Brandies in INS and
support legislative action toward the creation of a federal
misappropriation tort, thus reopening the federal courts as a venue
for the hot news doctrine.
211
This option would “present an
unequivocal statement from Congress” validating the doctrine as a
cause of action “essential to the maintenance of a free and vibrant
press.”
212
By legislatively creating a cause of action, the option
205
Id.
206
Id.
207
See Richard Posner, Misappropriation: A Dirge, 40 HOUS. L. REV. 621, 641 (2003).
208
See supra Part I.E.
209
See, e.g., X17, Inc. v. Lavandeira, 563 F.Supp.2d 1102 (C.D. Cal. 2007).
210
Balganesh, supra note 137, at 135.
211
Bruce W. Sanford, Bruce D. Brown & Laurie A. Babinski, Saving Journalism with
Copyright Reform and the Doctrine of Hot News, C
OMM. LAW. 8, 10 (2009).
212
Id.
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would be available to the industry without having to wait for the
slow development it would require at common law.
213
In 2003,
Congress considered implementing a federal hot news doctrine
based on the three extra-element tests in NBA.
214
The bill never
passed, but support for it continues.
215
Proponents maintain that
Congress should create a flexible statutory scheme based on the
NBAs test but applying a Barclay’s approach, focusing on the
conduct of the misappropriator.
216
Suggestions include applying
not only the five-factor test, but also a necessary showing of the
plaintiff’s acquisition of the information first and an affirmative
defense for defendants who can show they have done their own
reporting.
217
The statute should allow courts to choose from
among a variety of remedies including “injunctions, compulsory
licensing, and damages, depending upon the context and
circumstances of each individual case.”
218
The goal in implementing these changes would be to create
uniformity in the application of the doctrine.
219
States have been
changing how the hot news doctrine functions within their borders.
Many cases in recent years have stayed true to the NBA factors.
220
Creating a statutory system with a basis in the NBA factors would
fit into the existing scheme already in place in some states.
221
However, creating a statutory scheme would also expand the right
to states, which had previously determined that the hot news
doctrine did not survive copyright preemption. As Lauren
Gregory, in her Note for the Vanderbilt Journal of Entertainment
and Technology Law, writes, “[c]ountless bloggers and citizen
journalists act in their own interest, and will continue to do so
without clear guidelines that have penalties attached to curtail
213
Id.
214
Gregory, supra note 27, at 608.
215
Id. at 608.
216
Id. at 611.
217
Id.
218
Id. at 612.
219
See Sanford, Brown & Babinski, supra note 211, at 10.
220
See supra Part I.E.
221
See Scranton Times L.P. v. Wilkes-Barre Publ’g. Co., 3:08-CV-2135, 2009 WL
585502, at *3–4 (M.D. Pa. Mar. 6, 2009); X17, Inc. v. Lavanderia, 563 F. Supp. 2d 1102,
1106 (C.D. Cal. 2007).
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parasitic newsgathering practices.”
222
Nowhere is this activity
more prevalent than on the Internet, where jurisdictional
boundaries are meaningless.
C. Using the Copyright Act
In a similar vein to supporters of a federal misappropriation hot
news tort, others argue that copyright should be extended to fill the
gap the hot news doctrine now serves to protect.
223
While on the
one hand it would solve the issues of preemption the hot news
doctrine has faced since 1976 and it would address the concerns of
uniformity, copyright claims and hot news address different legal
concerns.
224
For instance, Eric P. Schmidt at University of
Colorado Law School took into consideration the effects of
extending the Copyright Act.
225
He stresses that the hot news
doctrine is at its heart about anticompetitive conduct, while
copyright is about infringement and fair use.
226
Copyright has long
been established on the idea-expression dichotomy.
227
Facts and
ideas are treated the same and are given no protection under the
Act.
228
Under copyright law today, infringement occurs when “the
author of the work holds a valid copyright, and the elements of the
work that are copied are original.”
229
This test completely fails to
protect against free-riding by competitors. Meanwhile, the ruling
in Feist remains good law, meaning the compilation is protected
but the underlying facts are left for the pickings.
230
Furthermore,
the defense of fair use remains open to aggregators, who can easily
222
Gregory, supra note 27, at 610.
223
Eric P. Schmidt, Note, Hot News Misappropriation in the Internet Age, 9 J.
TELECOMM & HIGH TECH. L. 313, 324 (2011).
224
Id.
225
Id.
226
Id. at 325.
227
Id.
228
See supra Part I.D.
229
Brian Westley, How A Narrow Application of “Hot News’ Misappropriation Can
Help Save Journalism, 60 A
M. U. L. REV. 691, 712–13 (2011).
230
See id. at 713–14 (presenting an appropriate example using the original reporting of
Bob Woodward and Carl Bernstein on the Watergate scandal. The report itself would be
protected under copyright, meaning the entire story could not be closely copied and
republished. However, the facts making up the story could legally be taken and rewritten
into a new story by another source.).
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argue that the use of a copyrighted work for news reporting is a
fair use of the work.
231
The decision in Feist is one of the things standing in the way of
copyright protection being extended to the factual content the news
industry seeks to protect with hot news. The Supreme Court
rejected the “sweat of the brow” theory in Feist because it based its
decision on evidence that showed virtually no effort, or labor, on
the part of the phone companies in collecting the information being
disputed.
232
Feist blocks publishers from asserting copyright
infringement claims. They can try to “assert copyright
infringement in the headlines and brief snippets that aggregators
often copy into their links, but the doctrine of fair use as it
currently stands may well cover the duplication of small portions
of text.”
233
This question was at the heart of litigation involving
Google and Agence-France Presse for Google’s use of the latter’s
headlines, photos, and news summaries, but the case settled before
it reached trial.
234
Fair use, the second issue involved in incorporating hot news
into the Copyright Act, is exemplified by the above case between
Google and Agence-France.
235
Central to the Copyright Act are
two ideals: the right to invest your product with a property right,
and the idea that this property right is subject to the imposition of
limitations on that right, in the form of a fair use defense. Fair use,
in most cases, is the trusty friend of the news industry, allowing it
access to normally copyrighted material.
236
However, the
application of fair use in aggregating contexts tends to work
231
Id. at 714; see also 17 U.S.C. § 107 (2006).
232
See Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361–63 (1991);
see also Sanford, Brown & Babinski, supra note 211, at 8.
233
See Sanford, Brown & Babinski, supra note 211, at 8.
234
First Amended Complaint for Preliminary and Permanent Injunction and Copyright
Infringement, Agence France Presse v. Google, Inc., No. 1:05CV00546, 2005 WL
5834897, at ¶28 (D.D.C. Apr. 29, 2005).
235
Id.
236
17 U.S.C. § 107 (2006) (“Notwithstanding the provisions of sections 106 and 106A,
the fair use of a copyrighted work, including such use by reproduction in copies or
phonorecords or by any other means specified by that section, for purposes such as
criticism, comment, news reporting, teaching (including multiple copies for classroom
use), scholarship, or research, is not an infringement of copyright.”).
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against the industry.
237
The doctrine was intended to support the
very purpose of copyright by promoting the development of new
ideas that build on older ones.
238
Regarding the four factor test for
fair use,
239
the Supreme Court has determined that the factors be
evaluated and weighed together “in light of the purposes of
copyright.”
240
In applying this flexible standard, courts have found
fair use in cases involving the aggregation of content online. The
Ninth Circuit, in Perfect 10, Inc. v. Amazon.com, Inc., found that
the “transformative nature of Google’s search engine” and the
resulting public benefit outweighed Google’s commercial use of
thumbnailed images.
241
In determining the transformative nature
of the search engine, the court focused on the improved access to
information online provided by the thumbnails, and primarily, their
ability to serve as pointers directing a user to the source of the
information.
242
The same argument can be made of aggregators of
news content, which usually tend to link back to the original
source.
In 2008, GateHouse Media brought copyright infringement
claims against the New York Times, alleging it had copied
headlines and ledes from GateHouse Media’s Wicked Local
website for use on the Times’ local news aggregation site
Boston.com.
243
The case also settled before trial, leaving the
question of how courts will deal with fair use and news
237
See Perfect 10, Inc. v. Amazon, Inc., 508 F.3d 1146, 1163 (9th Cir. 2007).
238
Id.
239
17 U.S.C. § 107 (2006) (“In determining whether the use made of a work in any
particular case is a fair use the factors to be considered shall include—(1) the purpose and
character of the use, including whether such use is of a commercial nature or is for
nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount
and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.”).
240
Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994).
241
This case involved a copyright infringement claim brought by Perfect 10, Inc.
against Google and Amazon for displaying thumbnailed versions of Perfect 10’s images,
and in Amazon’s case for granting users access to Google content. Perfect 10, 508 F.3d
at 1166.
242
Id. at 1165.
243
See GateHouse Media v. The New York Times Co, Citizen Media Law Project
(Dec. 22, 2008), available at http://www.citmedialaw.org/sites/citmedialaw.org/
files/2008-12-22-Gatehouse%20Media%20Complaint.pdf.
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aggregators unanswered.
244
However, it is likely that when
applying this flexible standard, courts could determine fair use
does indeed apply to aggregated content, depending on its
transformative nature. In light of pro-aggregating arguments
outlining the social benefits of aggregation (i.e., easier access to
information), courts could determine that these benefits shift the
balance in a fair use analysis. By existing outside the confines of
copyright, the hot news doctrine avoids the fair use defense.
D. Keeping with the Common Law
Restructuring the common law hot news doctrine is also an
option for courts to pursue. Former journalist and law student,
Brian Westley, suggested a plan called “Motorola Plus,” which
consists of a slightly expanded version of the NBA five-factor
test.
245
Westley maintains the original first four prongs but
qualifies the last prong: “the defendant’s free-riding is likely to
reduce the plaintiff’s incentive to produce the product or service,
thereby threatening its existence.”
246
The change is intended to
show that the plaintiff is not required to prove that there has been
an actual damage to their business, but only that damages would
likely occur if the free-riding continued.
247
Motorola Plus would
require that the court ask two additional questions: (1) whether
protecting the plaintiff’s information will provide a tangible and
useful benefit to society, and (2) whether the plaintiff had the
information first.
248
Wesley argues that the first question is a way
of making sure that the values of intellectual property are
maintained.
249
The goal is to promote the continued production of
news works and not solely to reward the author. The second
question touches on the issue of timeliness inherent in the
doctrine.
250
The court, in inquiring whether the plaintiff had the
information first, can determine whether “the work’s societal value
244
Id.
245
Westley, supra note 229, at 716.
246
Id at 717.
247
Id.
248
Id. at 718–19.
249
Id.
250
Id.
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may be diminished to the point where the benefits of providing
protection no longer outweigh the costs.”
251
Westley also
incorporated several defenses into his Motorola Plus hot news
scheme, whereby the defendant can defeat a hot news claim if it
can show that it had independently reported the same facts
although they failed to be the first to break it and if they can show
that the information was used for commentary or criticism.
252
The plan proposed by Westley limits remedies to injunctive
relief. He proposed an injunction that lasts only until the
commercial value of the news has passed away.
253
The benefit of
not granting monetary damages is that courts would not be
obligated to involve themselves in the calculation of the impact the
copying had on the plaintiff.
254
While leaving out monetary
damages would prevent the judiciary from becoming entangled in
a determination of injury that the plaintiff is not even required to
show,
255
injunctive relief also presents similar problems. The
question of timeliness becomes prevalent. How does a court
determine when the commercial value of a certain story or line of
factual information has ended? Westley suggests that the news
originator should be given enough lede time to ensure the
continued investment in newsgathering.
256
E. Forget the Second Circuit
Another possibility to explore is to retain the doctrine
explained in NBA and in the district court’s opinion in Barclays,
returning to the five-step test first established in NBA and applying
this to news aggregators.
257
Proponents argue a continued use of
251
Id. at 719 (arguing that there are situations in which applying this protective right
has little practical value, such as situations involving natural disasters in which the value
of news is limited to very short time spans).
252
Id. at 720.
253
Id.
254
Id.
255
Prong five of the NBA test does not require proving that their business has been
damages, but only that there is a potential that it will be damaged if the activity continues.
256
Westley, supra note 229, at 720.
257
See John C. McDonnell, The Continuing Viability of the Hot News Misappropriation
Doctrine in the Age of Internet News Aggregators, 10 N
W. J. TECH. & INTELL. PROP. 255,
303 (2012).
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the hot news doctrine as applied in NBA would provide adequate
protection for the industry against news aggregators.
258
Furthermore, the protection maintains the industry’s incentive to
produce investigative news by ensuring they can bring suits for lost
revenue caused by this form of unfair competition.
259
In considering the practicality of applying the five elements to
news aggregators, commentators have found the test applicable.
260
The first prong, requiring plaintiffs show a cost in generating and
gathering information, has normally been easy to news generators
to establish.
261
Newspapers certainly expend resources in
investigating and producing stories.
262
Timeliness is arguably
applicable; even though questions remain as to how to determine
what is timely and how long this quality lasts, the value of news
has not really changed since the days of INS.
263
As for the third
prong, while aggregators can argue that they add value to the
content by either selecting it or repackaging the information,
Courts would, under this argument, likely see the lack of effort and
cost in production on the part of the news aggregators as free
riding.
264
The basis for direct competition, the fourth prong, is the
lack of click-through from aggregator sites to content originator
websites.
265
Preventing readers from reaching the source
constitutes direct competition.
266
Finally, the last prong, with its
low burden, merely requires the plaintiff to argue that continued
activity by the aggregators would reduce the incentive for them to
produce the content.
267
258
Id. at 67.
259
Id.
260
See id. at 51–55.
261
Id. at 51.
262
Id. at 51.
263
Id. at 52.
264
Id. at 53.
265
Id. at 54.
266
Id.
267
Id. at 55.
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III. MISCONCEPTIONS AND REEVALUATIONS—WHERE DO WE GO
FROM HERE?
Seth Lipsky, former editor of the now-defunct New York Sun,
has argued, “[t]he best strategy to strengthen the press would be to
maximize protection of the right to private property—and the right
to competition.”
268
These ideals are central to the INS decision in
and they are the crux of what is wrong with much of the hot news
debate. While INS formulated its decision in the now famous
“quasi property” language, the Court did not want to grant actual
property rights to the news industry.
269
Conscious of the public’s
right to factual information, subsequent formulations of the
doctrine have taken, and further incorporated, the ideals of
property into the hot news doctrine.
270
And yet, with so much
discussion about how to save the news industry, does Lipsky have
a point? Can private property and increased competition save the
news industry?
Part III takes into consideration the different options outlined
for the future of the hot news doctrine. However, it argues against
their implementation and presents an alternative scheme that, while
borrowing from those detailed above, addresses some of the
pitfalls the doctrine faces. It also addresses the implementation of
similar schemes in Europe and the roadblock prior restraint could
represent here in the United States.
A. Trouble in Paradise
Each of the above reinventions for the hot news doctrine
presents a valid path to solidification of the doctrine going
forward. Unfortunately, each is wanting in some way. A statutory
approach would benefit both legacy newspapers and news
aggregators by establishing an unambiguous federal system
applicable to all.
271
The universal applicability of a federal tort
necessitates the preemption of state law claims. Maintaining state
law claims, in this case, would lead to disparate treatment
268
GRAVES, GRUESKIN & SEAVE, supra note 25, at 3.
269
International News Service v. Associated Press, 248 U.S. 215, 235–36 (1918).
270
Balganesh, supra note 97, at 423.
271
See Sanford, Brown & Babinski, supra note 211, at 10.
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depending on where the misappropriation claim was brought.
272
Additionally, hot news could still be subject to the ambiguity of
preemption analysis if it is determined that some facet of the
common law remains in existence.
In dealing with preemption, the statute would have to address
the long-held belief that hot news was intended to survive
copyright preemption, while at the same time getting around the
very threat of preemption presented by the Copyright Act.
273
The
survival of hot news would be completely beholden to the federal
statute and would be limited by its reach, because the development
of the hot news doctrine in state courts would essentially be put on
hold. Claims would have to fit within the bounds of the statute.
274
The problem would then be to find a framework that provides
protection, preempts conflicting state laws, and is itself not
preempted. According to the Second Circuit, hot news survives
preemption only in a very narrow setting because of the
“importance of maintaining the uniform nationwide scheme that
the Copyright Act . . . provides.”
275
The uniformity protected by
the Second Circuit and implemented by Congress would mean the
flexibility provided by differing state jurisdictions would be lost.
By removing it from the common law, the doctrine would be more
susceptible to becoming stagnant, especially in light of the ever-
changing news and technology industry. Yet the fact remains that
the clarity provided by a federal misappropriation claim would
provide leverage for the industry in negotiating with aggregators,
something the currently weak doctrine does not provide.
In turn, incorporating the doctrine into the Copyright Act
would further weaken the hot news doctrine. Aggregators would
be given a strong and well-established defense to a claim brought
by a content generator. This too could amount to a constraint on
the ability of the doctrine to evolve. Commentators question the
ability of the federal doctrine to deal with the multitude of possible
272
See Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876, 896–97(2d
Cir. 2011).
273
See H.R. REP. No. 94-1476, at 134 (1976).
274
See Sanford, Brown & Babinski, supra note 211, at 10.
275
Barclays, 650 F.3d at 896 (2d Cir. 2011).
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scenarios that may arise in applying the NBA test.
276
A statute may
also become a “rigid set of rules,” and in the ever-changing world
of online media, a rule that cannot grow with the industry would
quickly become obsolete. Furthermore, hot news creates a cause
of action based not on originality but on facts, an idea that is the
complete antithesis of the ideals of copyright protection. These
ideals would tend to bar the incorporation of a hot news cause of
action into the copyright scheme.
The Motorola Plus plan seems promising until its ambiguity
also begins to create roadblocks. The plan leaves vital questions
unanswered. Setting up a remedy, or even a factor in the doctrine,
that revolves around something as ambiguous as time means that it
will ultimately begin to generate more problems than it solves.
Courts are ill-prepared to determine when the market value of
breaking news has diminished in a marketplace that runs twenty-
four hours a day and exists indefinitely online. Furthermore, the
lede time revenues are not necessarily compatible with investments
in newsgathering. Resources expended on newsgathering may not
reflect the amount generated by lede times, and the decision to
invest in certain newsgathering projects may come from more than
just how much profit the story generates. Injunctive relief also
fails to make up for the harm caused by the unfair competition that
has already occurred.
277
Finally, the NBA test as applied to news aggregators would
present challenges for the industry. Primarily, counterarguments
presented by aggregators could easily destroy a case in certain
situations. Direct competition, similarly to the argument presented
in Barclays, could be easily argued against, especially in situations
in which there is a feed aggregator or user-curated aggregator.
Blog aggregators could also be deemed outside of the sphere,
because they can be said to add some additional content. “Time-
sensitive” is an ambiguous term, and even applied on a case-by-
276
Sanford, Brown & Babinski, supra note 211, at 10 (“For example, what effect
should a lack of time sensitivity, one of the Motorola factors, have in a situation where
original content is posted not on a website where the time sensitivity of material is crucial
to the aggregator’s profit, but instead on a topical website built around the common
interests of certain readers?”).
277
Westley, supra 229, at 720.
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case basis provides no security to the industry when considering
whether to use the hot news doctrine. While there are pros to the
NBA test, it is certainly not without cons.
B. Property Myths in Hot News
As the news industry continues to struggle, it turns to the law
as a potential solution, of which AP v. Meltwater is a prime
example. Using legal solutions like copyright infringement and the
hot news doctrine, news organizations have been trying to beat
back the “reuse” trend popular online. News organizations
providing original journalism or “independent fact-finding
undertaken for the benefit of communities of citizens,” as generally
defined by geography,
278
have faced cutbacks in not only
advertising revenue and circulation sales, but also in the number of
staff and the size of their markets.
279
Industry analysts argue that
without these skilled, independent journalists “much of what
Americans need to know will go unreported and unexposed.”
280
While the providers of original journalism continue to wage war
against the highly successful aggregators, many argue that
silencing aggregators in turn means silencing a faction of the
public’s voice. The struggle is to find a balance between the two.
There are many possibilities for reformulating the hot news
doctrine. There are many commentators supporting the continued
viability of the doctrine, not to mention the news industry’s
unwavering devotion to the continued existence and expansion of
the doctrine.
281
The problem is that somewhere along the way the
doctrine evolved far beyond the boundaries originally explicated in
International News Service. While the Court established its
decision in terms of property rights, the doctrine is one of unfair
competition. Balganesh argues this is in part due to the nature of
the news industry and developments that occurred in the last
century. First, she argues that propertarian views of the industry,
278
See GRAVES, GRUESKIN & SEAVE, supra note 25, at 3.
279
See id.
280
Id. at 3–4 (promoting the social need for responsible in-depth journalism).
281
See generally FEDERAL TRADE COMMISSION STAFF DISCUSSION: POTENTIAL POLICY
RECOMMENDATIONS TO SUPPORT THE REINVENTION OF JOURNALISM (May 20, 2010),
http://www.ftc.gov /opp/workshops/news/jun15/docs/new-staff-discussion.pdf.
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and in turn the hot news doctrine, came out of the growth of the
licensing market, necessitating a property right or entitlement on
behalf of the licensor.
282
In order to avoid a lawsuit, licensing
became the fee that competitors paid. In turn, the industry was
able to use this commoditized vision of the news to their
advantage.
283
However, the problem has always been and remains
that news does not easily give itself to an ex ante legal
definition.
284
Evolving hand in hand, the property-based
understanding of the doctrine promoted the growth of licensing,
while at the same time the growth only solidified the property
misconceptions in the hot news doctrine.
Balganesh characterizes what she sees as the second problem
as “an in rem interest.”
285
The flaw comes from the expansive
property understanding applied to the doctrine, an in rem right that
remains indefinite at all times and that works against all
individuals. The hot news doctrine, as a quasi property right, was
established to work only against a certain class of individuals,
namely direct competitors.
286
She finally articulates that the
injunctive remedies applied added to the problem of the
propertization of the doctrine.
287
The factors helped in creating a
property myth surrounding the hot news doctrine, which, as stated
before, is based in unfair competition. The goal of the industry is
to capture the time value of news, which becomes increasingly
difficult when the dissemination of news today is “immediate and
multimodal.”
288
To Balganesh, the threat of free riding lies in
aggregators’ ability to impair the collection process as a whole,
diminishing incentives and slowing the dissemination of news.
289
The INS doctrine was formulated to prevent this market-based
282
Balganesh, supra note 97, at 432.
283
Id. at 433.
284
Id. at 434 (arguing that “misappropriation had to be understood as an ex ante legal
entitlement, one with boundaries that could be identified prior to a dispute/litigation, and
which preferably revolved around a discrete asset—news”).
285
Id. at 435–36.
286
Id. at 435.
287
The distinction originally made by courts of equity in equating property rights with
injunctive relief fueled this belief. Id. at 437–38.
288
Id. at 442.
289
Id. at 442–44.
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harm. She explains that this market-based harm was a collective
one meant to protect the dissemination of the news and maintain
the market wide incentive to collect news (and, she argues, provide
to the common pool).
290
Unfortunately, hot news turned into a
property regime protecting the industry under the guise of
incentivizing the collection of news.
C. Here’s to Change: A New Hot News Formulation
No matter the current state of hot news, some form of the
doctrine needs to remain. The values set up in INS remain
important today, and the value of original reporting cannot be
paralleled. But while the many options presented above provide
some guidance for possible routes the doctrine may take, I propose
that the best route is to return hot news to the market by promoting
a system of self-regulation with a more precisely defined common
law system that takes into consideration what the news industry is
really like today. The system, in its application to newspapers and
news aggregators, would be loosely based on the NBA test, but
with a few important changes.
First, the time sensitive nature of the information will no longer
be based on linear understandings of time. In the digital age, this
understanding of timeliness is no longer appropriate when content
remains online for indefinite periods of time. This is known as the
long tail.
291
Taking into consideration the amount of information
that continues to live on in the Internet, the analysis of timeliness
will be based on the genetic signature
292
and lifecycle of the
information. The life of the topic and story line, based on the level
of searches it achieves, is a clear numerical indicator of the length
of time an originator could expect to make a profit from the story.
Seemingly complicated, this system could easily work to use the
290
Id. at 444.
291
Chris Anderson, The Long Tail, WIRED, Oct. 2004, available at
http://www.wired.com/wired/archive/12.10/tail.html. Digital content and storage also
allows industries to present older information and niche media to consumers at a greater
rate.
292
Steve Lohr, Study Measures the Chatter of the News Cycle, N.Y.TIMES (July 12,
2009), http://www.nytimes.com/2009/07/13/technology/internet/13influence.html
(“Frequently repeated short phrases, according to the researchers, are the equivalent of
“genetic signatures” for ideas, or memes, and story lines.”).
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information that is already collected by many competing online
industries to calculate the true value of a news story. It also works
to further integrate the two parties, news generators and
aggregators, but with a purpose.
Along with this, the doctrine should step away from the
property values it has so long incorrectly embraced by expanding
the remedies beyond the traditional injunctive relief. While
preliminary injunctions would still be useful in preventing further
appropriation, approving damages remedies
293
would grant the
traditional industry the right to gain some reparation from the
misappropriation suit. Namely, as suggested above, court ordered
licensing schemes would provide much needed reparation but
would also grant the aggregating community the opportunity to
continue competing. The use of new remedies begins to chip away
at the ideas of individual property in the news.
Licensing begins to lead the doctrine toward a mode of self-
regulation, slowly attempting to diminish the industry’s
dependence on the legal system. The truth of the news industry is
that it will continue to grow exponentially in the next decades and
yet, in the last few, it has accomplished little to no headway in
establishing a profitable foothold in the online market. Doctrines
that continue to push the industry toward revenue-generating
mechanisms online only support the industry’s growth. Licensing
is a part of the framework already being established by news
generators through systems like News Right. The organization is
set up to monitor and facilitate the establishing of licensing
agreements between original news reporters and aggregators.
Promoting the licensing scheme will solidify this business model,
providing much-needed revenue sources and protecting the
293
Balganesh, supra note 97, at 453–54. If the measure of liability is to be unfair
competition, then the remedy should reflect such a principle. This rationale leads to the
formulation that the award be the “disgorgement of any unfair cost saving it [the
misappropriator] had obtained by its act of free riding.” Balganesh argues for a damages
award and claims is would accomplish three things: prevent “systematic free-riding by
new entrants,” it would enable a defendant to assert that independently exerting resources
to verify information culled from originators show there was no cost saving (similar to
the defense in Motorola Plus), and it would “allow existing forms of cooperation to
continue.” Id.
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incentive for newsgathering. Licensing promotes a collective
outlook on property rights in the news. As projected, the system is
not in the business of promoting litigation. A system that supports
this framework will prevent further litigation and establish clear
guidelines and expectations among members of the news
community. News Right is not the next Righthaven, which has
been systematically criticized as a litigation farm.
294
Righthaven,
founded in 2010, is a copyright holding company that has been
criticized for being a litigation shop whose sole purpose is to bring
copyright infringement claims.
There are concerns that licensing would succeed in further
embedding hot news in the property scheme. Facts must always
remain a part of the public domain. The role of licensing in
establishing a property scheme in the news has been discussed, and
an absolute property interest in the factual information discredited;
however, the value of this system is in developing industry
standards that will serve to regulate the industry without constant
litigation. An industry standard can fluctuate with the changing
market in better ways than the common law and statutory
legislation. It also requires less judicial involvement in the
determination of what is appropriate. The market will determine
what content is worthwhile to report and aggregators will pay a fee
representing their investment in the gathering of the information.
By ensuring generators do not lose revenue on content being used
by aggregators; the hope is that they will have enough to continue
investing in newsgathering that, while not in demand, is still
valuable to society.
D. Foreign Licensing Schemes
Around the world, the industry faces similar problems.
Recently, Germany proposed a revision to their copyright act that
would create a system similar to what is being proposed above,
294
Steve Green, Gibson Remains CEO of Righthaven, Appeals to Continue, VEGASINC
(Oct. 31, 2012), http://www.vegasinc.com/news/2012/oct/31/gibson-remains-ceo-
righthaven-appeals-continue. Righthaven would acquire copyrights from newspapers
specifically for lawsuit purposes and brought 275 no-warning suits between the years
2010 and 2011. See also Kramer, supra note 48.
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granted through a federally imposed system.
295
The proposal calls
for ancillary copyright protections for news publishers.
296
These
protections would allow publishers to demand a fee for the online
use of their material. The legislation limits the reach of these
protections by aiming primarily at search engine operators and
“online services that aggregate content in a manner comparable to
that of a search engine.”
297
The legislation targets systems like
Google News by making illegal the indexing of news sites by
operators.
298
The rationale is that these systems use content in
order to generate profit for the parent company (i.e., Google)
which has little connection to the news industry.
299
These systems
will be required to purchase licenses in order to make use of
content produced by news industries. The legislation faces
opposition with Google, not surprisingly at the forefront.
300
Nearby in France, Google is also facing changes in the law.
Policy makers are threatening to implement laws that would
require Google to pay for linking to French news agency
content.
301
The concern remains that by removing a source like
Google, the industry would suffer a reduction in the number of
visitors to their websites.
302
The future costs of a system like this
may not be known until it is systematically implemented. The
threat to access presented by a licensing scheme, as pointed out by
Google, is a valid concern. However, the benefit of a licensing
295
English Translation of Ancillary Copyright for Publishers as Passed by German
Governmenrt, DER PRESSESCHAUDER (Sept. 3, 2012), http://www.presseschauder.de/
english-translation-of-ancillary-right-for-publishers-as-passed-by-german-government.
296
Id. at A.
297
Id. at A.II.
298
See id. Germany is limiting the protection against aggregators that mainly function
like feed aggregators.
299
See id. (“This is because their business model is particularly oriented towards
accessing published materials for the benefit of these providers’ own added value.”).
300
Defend Your Network, https://www.google.de/campaigns/deinnetz (last visited
December 1, 2012).
301
Reuters, France To Act To Force Google To Pay for News, CHICAGO TRIBUNE (Oct.
29, 2012), http://www.chicagotribune.com/business/breaking/chi-france-to-act-to-force-
google-to-pay-for-news-links-20121029,0,1550062.story.
302
Google threatened French news industries with boycotting if a licensing system
were implemented in France. See Olivier Esper, The Facts About our Position on French
Copyright Proposals, G
OOGLE EUROPE BLOG (Oct. 18, 2012), http://googlepolicyeurope.
blogspot.be/2012/10/the-facts-about-our-position-on-french.html.
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system is that it forces businesses like search engines, which have
in the last ten years ingrained themselves into the distribution
system, to take part in the news infrastructure that has been in
place for over 100 years. Newspapers were built on the licensing
framework, an aspect aggregators have been simply skirting.
France and Germany are only forcing aggregators to take part in
the system.
E. The Trouble with Prior Restraints
The implementation of systems like those being explored in
Germany and France would face a large obstacle in the United
States. The doctrine of prior restraint is a long held common law
doctrine referring to the “judicial orders and administrative rules
that operate to forbid expression before it takes place.”
303
From
the time of Blackstone, the principle that there should be no
previous restraints on expression has held true.
304
American
constitutional law retains this strongly held belief. While the
Supreme Court has not held that prior restraints are not per se
prohibited,
305
the requisite burden for establishing a valid prior
restraint is so high that it basically amounts to a per se prohibition.
Subsequent restraints, in other words penalties after publication,
have not been given the same treatment and are still widely
implemented. The fear with prior restraints is that they prevent
ideas and information from reaching the marketplace.
306
The
“freezing” aspect of prior restraints hurts the timeliness of speech,
preventing citizens from accessing the important information they
need.
307
A subsequent restraint, on the other hand, provides
citizens with the information they need in a timely fashion and the
consequences of the publication only come at a later date, outside
the realm of public domain.
303
SMOLLA & NIMMER ON FREEDOM OF SPEECH § 15.1 (1996).
304
SMOLLA & NIMMER ON FREEDOM OF SPEECH § 15.2.
305
See Near v. State of Minn. ex.rel. Olson, 283 U.S. 697, 720 (1931); Nebraska Press
Ass’n v. Stuart, 427 U.S. 539, 558 (1976).
306
A subsequent restraint allows the information to be disseminated and the publisher
deals with the consequences. S
MOLLA & NIMMER ON FREEDOM OF SPEECH § 15.10.
307
Id.
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While a concern in the implementation of any pre-publication
doctrine faces the prior restraint hurdle, the proposal herein
outlined does not. Freedom of expression and freedom of the press
are a vital part of American constitutional law and a defining
characteristic of the American newspaper industry. Protections
implemented through a hot news system as described above would
focus its energies on promoting restructuring through the
imposition of subsequent restraints. Imposing a licensing
agreement between aggregators and originators would occur after a
successful suit brought by the publisher suffering from
misappropriation. Freedom of expression would in no way be
infringed upon. The information is already public; it is this very
fact that makes aggregation possible in the first place.
Aggregation, particularly that done by feed aggregators, does not
embody what prior restraint intended to protect.
CONCLUSION
Ultimately, taking the aggregation “turbine” under control and
incorporating it into the system is a solution the news industry
could implement through the hot news doctrine. As aggregators
are forced to pay licensing fees and cooperative efforts are
furthered, a strong marketplace-driven news industry will develop.
Systems like the hot news doctrine and News Right will work to
protect the industry and investment in newsgathering practices. In
the end, the principles of INS are maintained; a system protecting
both aggregators and generators means news will continue to reach
audiences and information will flow steadily, fulfilling the purpose
of the industry.
At the moment, Barclays reigns over the hot news doctrine,
incapacitating claims that do not fit the narrow framework left by
the Second Circuit. With continued interest in the doctrine, the
industry may ultimately, and hopefully, push the courts into
coming to some determination about the hot news doctrine. The
development of cases like AP v. Meltwater will be of particular
interest. Sustaining the doctrine would benefit the industry,
providing it a much needed legal recourse. The news industry has
been failing for years. A continued system of catch-up will never
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ensure its survival. A legal recourse like the hot news doctrine
could mean the difference between continued investigative
reporting and fealty to The Huffington Post crowd. The sad reality
is that the turbine would not exist if not for the news generating
industry that gathers all of the content being churned out by news
aggregators. In the end, a profit-sharing coexistence is the only
way forward—and the changes to the hot news doctrine suggested
by this Note could lead us one step closer in that direction.
