International News Service v. Associated Press

Brief Fact Summary. Defendant took Plaintiff’s published news and sold it to Defendant’s clients. Plaintiff sued Defendant for unfair competition.

Synopsis of Rule of Law. Defendant’s process amounts to an unauthorized interference with the normal operation of complainant’s legitimate business precisely at the point where the profit is to be reaped, in order to divert a material portion of the profit from those who have earned it to those who have not; with special advantage to Defendant in the competition because of the fact that it is not burdened with any part of the expense of gathering the news.

Facts. The parties are competitors in the gathering and distribution of the news and its publication for profit in newspapers throughout the U.S. Associated Press (Plaintiff) was engaged in the business of gathering and disseminating news to its constituent members. The total cost of Plaintiff’s service was about $3,500,000 annum. Its individual members shared in that cost. Each member agreed by Plaintiff’s bylaws that news received through the service was received exclusively for publication in a newspaper and that no other use would be made of the information in advance of the publication. Each member was also required to gather news in his district and supply it to Plaintiff and no one else. International (Defendant) is in the same business as Plaintiff. They were competitors. It is obvious from the facts that the information gathered had time sensitive value and that there would be enormous competitive advantage to get the story published first. Associated Press (Plaintiff) sued
International (Defendant) for bribing the employees of its member news organizations for news information, for inducing Plaintiff’s members to violate its by laws and permit Defendant to obtain news before publication, and by copying news from bulletin boards and from early editions of Plaintiff’s newspapers and selling this either in whole or after rewrite to Defendant’s members. The issue before the court was whether Defendant can be restrained from appropriating news taken from bulletins issued by Plaintiff or any of its members, or from newspapers published by them for the purpose of selling it to Defendant’s clients. Plaintiff got a preliminary injunction against Defendant. The Supreme Court granted certiorari.

Issue. Does Defendant’s admitted course of conduct in appropriating, for commercial use, matter taken from bulletins or early editions of Associated Press publications constitute unfair competition in trade?

Held. Yes. Judgment for Plaintiff.
* News articles often possess a literary quality, and are the subject of literary property at the common law. An article, as a literary production, is the subject of copyright. But the news element – the information respecting current events contained in the literary production – is not the creation of the writer, but is a report of matters that ordinarily are publici juris. We need spend no time, however, upon the general question of property in news matter at common law, since the case must turn upon the question of unfair competition in business.
* Except for matters improperly disclosed, or published in breach of trust or confidence, or in violation of law, none of which is involved in this branch of the case, the news of current events may be regarded as common property. The Court is concerned with the business of making the news know to the world, in which both parties to the present suit are engaged.
* The right of the purchaser of a single newspaper to spread knowledge of its contents gratuitously, for any legitimate purpose not unreasonably interfering with complaint’s right to make merchandise of it, may be admitted; but to transmit that news for commercial use, in competition with complainant – which is what Defendant has done and seeks to justify – is a very different matter. Defendant’s process amounts to an unauthorized interference with the normal operation of complainant’s legitimate business precisely at the point where the profit is to be reaped, in order to divert a material portion of the profit from those who have earned it to those who have not; with special advantage to Defendant in the competition because of the fact that it is not burdened with any part of the expense of gathering the news.
* The contention that the news is abandoned to the public for all purposes when published in the first newspaper is untenable. Abandonment is a question of intent, and the entire organization of the Associated Press negatives such purpose.

Dissent. (J. Brandeis) News is a report of recent occurrences. The general rule of law is, that the noblest of human productions – knowledge, truths ascertained, conceptions, and ideas – become, after voluntary communication to others, free as the air to common use. Defendant’s taking and gainful use of a product of another which, for reasons of public policy, the law has refused to endow with the attributes of property, does not become unlawful because the product happens to have been taken from a rival and is used in competition with him.
Concurrence. (J. Holmes) I would have limited relief to requiring Defendant to give express credit to Plaintiff for the news it took.

Discussion. In this case, Defendant’s conduct is considered unfair competition because if Defendant were to permit to use Plaintiff’s research without compensation, there would be no reason for Plaintiff to gather the news. Defendant’s business seeks only to free ride off the Plaintiff’s effort and reap the benefits.