The cause of action for misappropriation of reports of breaking news, i.e., “hot news” misappropriation, has been around for going on a century, since the U.S. Supreme Court opinion in International News Service v. Associated Press, 248 U.S. 215 (1918). In that landmark case the Court recognized a “quasi property” right in such reports on the part of a news-gathering organization under federal common law.

Survival of the hot news misappropriation claim, and its applicability to online news aggregators, has been the subject of much discussion and debate as news aggregation sites have become ubiquitous on the Internet, on sites ranging from Google News to thousands of more modest offerings. The AP, which was the prevailing plaintiff in the landmark case 90 years ago, has been successful in obtaining settlements with a number of online news aggregators that used its material, including a settlement with Google News in 2006 and a settlement with Moreover and its parent company Verisign last year.

The AP has again made progress in this ongoing battle, this time in its hot news misappropriation lawsuit against online aggregator All Headline News Corp. In this case, the court issued a ruling that recognizes not only the AP’s misappropriation claim, but its claim under the Digital Millennium Copyright Act copyright management provision as well.

In The Associated Press v. All Headline News Corp., et al., the AP alleged several causes of action arising from the aggregator’s alleged unlawful copying and alteration of AP news stories: Violation of the Copyright Act, the copyright management provisions of the DMCA, the Lanham Act and New York common law, i.e., the hot news misappropriation claim. As to the business of All Headline News Corp (AHN), the opinion related the following drawn from the AP’s complaint (with citations thereto omitted):

By contrast [to plaintiff AP], defendant AHN does not undertake any original reporting.  It hires “poorly paid individuals” to find news stories on the internet and prepare them for republication under the AHN banner, either rewriting the text or copying the stories in full.  Defendants W. Jeffrey Brown and Danielle George, who oversee AHN’s day-to-day operations, instruct AHN writers to locate breaking news stories and revise them for AHN use. Many of AHN’s stories are based on the original work of the AP, but they are marketed as originating with AHN. Brown and George instructed reporters to remove or alter the identification of the AP as author or copyright holder of the articles.  Once completed, AHN distributes its articles to paying clients – web sites to which AHN markets itself as a news provider.  As noted, the AP characterizes AHN’s conduct as “free riding” on the original reporting of others.

In declining to dismiss the hot news misappropriation claim, the court had to clear a few hurdles. First, the court found that after Erie Railroad v. Tompkins in 1938 (“there is no general federal common law”), the federal common law cause of action survived under New York law and second, that the hot news misappropriation claim was not preempted by the federal Copyright Act. On these points, the court had the assistance, or rather the mandate, of the Second Circuit’s ruling in National Basketball Association v. Motorola, Inc., 105 F.3d 841, 845 (2d Cir. 1997) (hot news misappropriation claim remains viable under New York law and is not preempted by copyright). The court found that it saw no basis for ruling otherwise than as indicated by the NBA case.  Finally, in its conflicts of law analysis, the court rejected the argument that Florida law (as urged by the defendant) applied. In doing so the court concluded New York law did not conflict with Florida law even though Florida has no authority recognizing a hot news misappropriation claim.

The court declined to dismiss the AP’s claim under the DMCA copyright management provisions, which prohibits the removal or alternation of “copyright management information.” 17 U.S.C. §1202. The court rejected the argument that the DMCA provision is limited to alternation of “technological” copyright management information and does not extend to the simple mechanical removal of references to the AP as author or copyright owner of the news stores.

In construing the DMCA, the court relied on a plain language approach and refused to consider the legislative history cited by AHN. Accordingly, the court rejected the contrary analysis adopted by judges in the District of New Jersey and the Central District of California. For example, in IQ Group, Ltd. v. Wiesner Publishing LLC, 409 F. Supp. 2d 587 (D.N.J. 2006) a claim that removal of a copyright owner’s logo and a hyperlink to its Web site violated 17 U.S.C. §1202 was rejected as a matter of law. The court in IQ Group acknowledged that the plain language interpretation was “plausible,” but concluded that not only would that interpretation blur the lines between copyright law and trademark law, it was inconsistent with focus in the DMCA legislative history on tampering with “automated copyright management systems functioning within a computer network environment.”

The court did dismiss the AP’s trademark related claims finding in general that those claims were not sufficiently specific.

The ruling in The Associated Press v. All Headlines News Corp. is certainly a big win for the AP, but it does not answer all outstanding questions concerning the use of news reports in the online arena. First, it does not address the use of headlines and lead-ins, also an open issue and the subject of dispute. Second, it is not a ruling on the merits of the AP hot news claims against AHN, although the opinion strongly favors the AP position on the merits. Third, it does not address the more difficult and complex questions concerning the use of news reports by bloggers and others who do not merely excerpt and link to online news reports such as those produced by the AP, but add commentary to them as well. Last year, controversy erupted in the blogosphere when the AP sent a DMCA take-down notice to The Drudge Retort blog, and then indicated that it would disseminate a set of fair use guidelines for bloggers who wished to use its content. No guidelines were forthcoming, however, and the dispute with The Drudge Retort blog was settled without litigation.

Note also that the AP is not the only news organization to make claims or bring suit with respect to online news aggregators.  A lawsuit by Gatehouse Media involving Web site screen scraping and excerpting of news stories on the Boston Globe newspapers Boston.com site was settled last fall. A representative of The New York Times Co., the parent company of the Boston Globe and the defendant in the case, took the position in a post-settlement statement that “the use of headlines and ledes is fair use.”